The Reality of Now

JUST SIT BACK - So it feels like the market has entered a phase where it just doesn't matter anymore. Even the bears have stopped trying to come up with explanations for the price action, with some perhaps going as far as to convert and actually go long stocks. It seems everyone has arrived at the unspoken conclusion that it just doesn't matter. The market will continue to go higher and higher and that's just a new fact of life. Of course, this isn't going to be the reality of it all, but IT IS the reality of now...and YES...the reality of now is a scary thing. The reality of now also has Bitcoin trading up to $10,000, an astonishing, jaw dropping development, that has probably at this point surpassed even Tulip Mania itself. Will it ever stop? Of course. But...we really need to think in big picture terms right now. Stressing every point higher won't do you any good and if you are in something for the long term, it just shouldn't matter. So sit back, take it all in and then be ready for that moment when it all comes crashing down....and it crashes down even more, as every little thing becomes a big deal and all of the big deals that were shrugged off can no longer be shrugged off any longer.

cartoon nov 28

FX SIDE - As far as currencies go...well I suppose I need to now qualify this as far as 'traditional' currencies go, the story is much different and has been quite controlled and predictable. The US Dollar is back under pressure and looking like it could be getting ready to extend its 2017 run of declines. As you all know, we have been positioned this way and will continue to look for opportunities to take advantage as they present. I continue to look for those opportunities through the Euro and Pound, where I believe there is the greatest potential for considerable outperformance in the months ahead. When you consider this looming risk of a meltdown in risk appetite and a US administration that doesn't want to see a strong US Dollar, the currencies that stand to benefit are the other liquid currencies, and those currencies are the Euro and Pound, both coming off longer-term cycle lows, making this trade even more attractive. I like the Yen higher as well (USDJPY lower), but am not as convinced about the Yen's prospects for sustained appreciation in a risk off setting, given the currency is not really a safe haven currency and is only similar in that it is low yielding and has been used to fund higher risk investment. But overall, from now into year end, the strategy will be to be looking to continue to build meaningful short exposure in the Buck. If we see a Euro or Pound move that has rocketed too far on a given day, I will be happy to take a shot and fade for a short term play, but as far as the meat and potatoes go, it's about selling the Buck now.

The rally in stocks looks like it will never come to an end. What does this mean?

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