THE YEAR AHEAD - As I look ahead to 2015 there are two trades that stand out for me at the moment. There will be others I discuss in the days ahead, but these are the two that have been on my mind these past few days. One of them I am already trading, and the other I have played a little with in recent days but only for quick in and outs. But as we look ahead to the coming year and look at the longer-term charts for both of these markets, it seems there could be some really good opportunity in taking a buy and hold approach. So let's get to it.
IDEA ONE - The first trade is long AUDNZD. Several days back I established a long AUDNZD position at 1.0830. Historically, this market is trading off cyclical lows, and technically, I believe we are now in the slow process of a longer-term recovery from the 1.0500 area low set back in January. Looking back twenty years, each and every time this market has traded down into the 1.0500 area it has triggered some major contra moves. I will happily buy some more in the 1.0700s if given the opportunity and will look to see if we can't get a rally that takes us closer to 1.2000 in 2015. Fundamentally, Aussie has been bad. But I think Kiwi has some catching up (catching down) to do on that front. Given Kiwi is the higher yielding currency, should we see a capitulation in global equities, Kiwi could be the more exposed of the two in 2015.
IDEA TWO - The second trade is US Oil. This market has collapsed in 2014 and this story has come out of nowhere, with the market dropping from well over 100 earlier in the year to the lower 60s thus far. Now I know the market has been riddled with oversupply issues, brought on by the US shale boom and unwillingness for OPEC to slash production. But at the end of the day, these players aren't going to want to lose their businesses and have the ability to determine when the demand will come back into the market. Throw in the severely stretched technicals and I believe there could be an amazing opportunity to look to buy and hold in the days ahead. However, I would wait to see if we can't get a price with some kind of a 50 handle on it before buying. So maybe one more sharp drop this week into the 59s and pull the trigger. This is too much of a big game to see the price drop much more than we already have. Of course, you can't buy in the 59s with a stop-loss at 58 and change. You need to be able to put yourself in the position to buy and hold.
LOTS OF LOVE - So there you have it. The first two trades I like for 2015. Take a look and let me know what you think. I will say that I continue to be an aggressive US Dollar bull. The trouble with the Dollar right now is finding the right entry points. They just aren't there right now. So there is no point on really talking about it. I am here to try and add value and offer compelling actionable ideas. Anyway, that's all for today. Hope everyone is doing well. Oh ya...one more thing...this time of year I usually get a little soft and go outside of markets a bit. So make sure you are all enjoying your lives and spending that quality time where you need to be spending it. We all have so much love around us and we should always try to make sure this is where we are putting most of our energy. Otherwise, what's the point.