Contrarian's Nightmare


NOT A TRADER'S MARKET - It is becoming increasingly difficult to find good things to write about, with market volatility where it is into the end of the second half of the year. Currencies haven't been moving much, commodities a little more, while equities continue to climb without abandon, despite the super thin trade. Everything hinges on the Fed, and with the Fed failing to show any change to policy at the previous meeting, despite plenty of good reason to do so, it is just more of the same abnormally quiet and unnatural trade. I am not sure we can expect anything to change until the Fed changes, and until then, there isn't much to talk about. And now, as we head into the summer months, I wonder just how much more things will slow down. I will say, despite all of this, I am still foolishly expecting the Fed to respond to its guidance with some hawkish rhetoric, and as such, am not entirely convinced the summer will actually be as quiet as many think.

ANOTHER TRAP? - So what am I looking at? Well, nothing really new on this front. I continue to watch equities, and am fixated on USD/JPY and EUR/CHF. I am also paying close attention to the New Zealand Dollar, and continue to project relative underperformance despite recent strength. As a contrarian, and as a trader, this has been a super difficult and challenging market. Each and every time there are signs of technical reversal, these setups are negated almost as quickly as they form. Monday's price action is the perfect example. US equities have put in bearish reversal days that warn of a potential top, while USD/JPY and EUR/CHF have traded lower and are pressuring key support. Meanwhile, Kiwi gains have stalled out at 0.8750, and it looks like we could roll over here as well. And yet, these bearish signals have proven to be nothing more than traps time and again, and as such, selling into these reversals is not a strategy that has rewarded those who have attempted to do so. Perhaps when we finally do get some follow through, the time will have finally arrived to once again find confidence in these strategies. Until then, proceed with caution. Let's see how it all plays out on Tuesday.

Selling into bearish reversals has not been a rewarding strategy. @jkonfx

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