Earlier this week in forex news, Germany reported huge numbers in terms of its' GDP. And inasmuch as Germany is the economic engine that powers the EZ, one would be inclined to think that we should look for big numbers out of Europe when its' time to report. At the same time, Germanys' export numbers were huge, but the admin stoutly declared that the economy is more than just exports. HMMM...something sounds a bit fishy there. But until they can show us otherwise, exports is where their action is.
On this side of the pond, we have rapidly deteriorating numbers. Housing down, durable goods down, unemployment up (with new weekly numbers out tomorrow). Think they will be encouraging? I have had my doubts about this latest USD strength being a real flight to safety. After all, gold is off it's high, and not putting in new ones daily. This should indicate that a flight to safety may not be what is happening.
Perhaps it is only a retracement from a technical perspective. We shall see. For now the USD is getting dumped in anticipation that the GDP numbers they will present on Friday will be less than stellar, and may not even reach the forecasts from the Advanced reading. Remember, when it comes to GDP, there is the advanced or 1st reading, the second reading and the final reading. If you are looking at a forex news calendar, they will often be denoted by an A, S or F. And as a rule, they move the markets less with each reading...unless there is a notable departure from the previous reading.
I have a hard time believing that Friday's second reading won't be a disappointment. The real question will be, "How will the market respond?"
Will it see a deteriorating US economy as a sign to succumb to rising fear of an all out depression? Or will the Euro currencies, led by robust Germany, simply take the lead? Will all these austeriy measures be deemed a positive while the US is seen as extending more stimulus insead of tightening it's belt?
These are uncertain times in the forex. The most treacherous trading I've seen in some time. I am thankful for the nice return we've seen this month, more than most interest bearing accounts pay out in a year! And I am encouraged to have so many of you write to me and let me know that you have fared much better than our official numbers. That's great!
Let's continue to be cautious. Nobody ever suffered from being careful. Lastly, for those who wrote in today, and asked what I meant by "making money by standing aside", that is drawn from an old Jesse Livermore quote in his classic trading book, "Reminiscences of a Stock Operator". It's well worth the read. But he says there that he made more money by staying on the sidelines than by jumping in on every trade or price movement. As he finished very, very wealthy, his advice is worth paying attention to!
Happy Trading,
Bill
Wednesday, August 25, 2010
Monday, August 23, 2010
Forex and the Steinitz Fractal Breakout Indicator
Some of you followed my suggestion last week, and purchased the Forex indicator from Don Steinitz. I wanted to take a few paragraphs and let you know more fully why I think this particular indicator is well worth your time and money.
Those of you who have been with me for a long time, know that I do not "market stuff" to my clients unless it is my own, or, as in this case, I think it will benefit everybody in the long run. But as I mentioned on Friday, I don't mind at all making an exeption for Don's indicator. Like I told you, I had spent alot of time and money on numerous other courses and setups only to get burned repeatedly. As a novice trader, I was failing to see the big picture, and that the most successful traders ALWAYS use the trend to their advantage. For those of you who signed up to my free list, you may remember that before I directed you to the blog, the very first email lesson was on the determination of trend. Without it, we are like directionless pilgrims trekking through an unremarkeable desert landscape with no way to mark our bearings.
The genius of Don's indicator is first and foremost the algorithm he uses to determine trend. Now I make no claim to being an expert at mathematics, nor do I know the parameters of Don's algothims, but I do know that they are effective. The second part of his indicator is the means by which he measures retracements in the trends. As you know, it's one thing to identify a trend successfully, it's another entirely to be able to gauge a good entry to catch the rest of the wave. The indicator is not perfect, but it is accurate.
One thing that I did find helpful was to lengthen his stop losses. Doing so increased my number of successful trades when I used the indicator. Of course, it is always important to remember, that if you use this for intraday trading (as I have), be sure to shorten your profit targets. Shooting for 100 pips on a 15 minute chart is not wise management. It is true, every 100 pip move begins on a 15 minute chart somewhere, but you shouldn't look for that each time. Look to the most recent swing high or low (depending on whether you are going long or short) and target that point. Get some off the table at that level, and leave the rest run as a free trade.
If you haven't taken advantage of Don's indicator yet, please give it a try. For those of you who are anxious about trading different currencies than the ones I specialize in, this will really fill the bill. Remember, always size your risk properly, never overcommit and never over trade. Even the world's best indicator won't save you from those two mistakes!
If you haven't taken a look at it yet, just follow this link:
http://drwilliam.trader6969.hop.clickbank.net
Happy trading!
Bill
www.thefxtradingmasters.com
Those of you who have been with me for a long time, know that I do not "market stuff" to my clients unless it is my own, or, as in this case, I think it will benefit everybody in the long run. But as I mentioned on Friday, I don't mind at all making an exeption for Don's indicator. Like I told you, I had spent alot of time and money on numerous other courses and setups only to get burned repeatedly. As a novice trader, I was failing to see the big picture, and that the most successful traders ALWAYS use the trend to their advantage. For those of you who signed up to my free list, you may remember that before I directed you to the blog, the very first email lesson was on the determination of trend. Without it, we are like directionless pilgrims trekking through an unremarkeable desert landscape with no way to mark our bearings.
The genius of Don's indicator is first and foremost the algorithm he uses to determine trend. Now I make no claim to being an expert at mathematics, nor do I know the parameters of Don's algothims, but I do know that they are effective. The second part of his indicator is the means by which he measures retracements in the trends. As you know, it's one thing to identify a trend successfully, it's another entirely to be able to gauge a good entry to catch the rest of the wave. The indicator is not perfect, but it is accurate.
One thing that I did find helpful was to lengthen his stop losses. Doing so increased my number of successful trades when I used the indicator. Of course, it is always important to remember, that if you use this for intraday trading (as I have), be sure to shorten your profit targets. Shooting for 100 pips on a 15 minute chart is not wise management. It is true, every 100 pip move begins on a 15 minute chart somewhere, but you shouldn't look for that each time. Look to the most recent swing high or low (depending on whether you are going long or short) and target that point. Get some off the table at that level, and leave the rest run as a free trade.
If you haven't taken advantage of Don's indicator yet, please give it a try. For those of you who are anxious about trading different currencies than the ones I specialize in, this will really fill the bill. Remember, always size your risk properly, never overcommit and never over trade. Even the world's best indicator won't save you from those two mistakes!
If you haven't taken a look at it yet, just follow this link:
http://drwilliam.trader6969.hop.clickbank.net
Happy trading!
Bill
www.thefxtradingmasters.com
Wednesday, August 18, 2010
Forex and Relief Rallies
A relief rally is like the blowing off of a pressure valve. In today's example, we have been watching the pound sterling get sold off with pre monetary policy committee meeting jitters. From its' perch just below 1.5700, it fell 200 pips over several hours to a low just below 1.5500. There seemed to be nobody ready to bid it up, even though there were rumors that there might be a change in the status of the report that would include new language about raising rates. And maybe even a bonus of someone bedsides Andrew Sentance voting for an increase. Had the vote changed from 8-1 to 7-2, we probably would have seen a virtual explosion in the gbp/usd. As it was, we got a massive relief rally of over 150 pips as the longs jumped on and the shorts collected their profits.
But what will happen in the days ahead? Does this big move portend a change for the bulls? Probably not. It is a big move, but when viewed from a distance, we see it currently halting at previous resistance just below 1.5700. Now a couple of 4 hour closes above that level, a pullback to 1.5700, and then a bounce...that would change the outlook dramtically. But without that, we are left into a channel, until we get a move up or down. Currently, we've seen the pair very well bid around 1.5500.
But relief rallies also cause another phenomen, sympathy moves. Particularly in this case we've watched the euro climb higher on the back of the sterling and the swissy has been something of a beneficiary also. As a rule, I don't like to jump onto relief rallies. Mostly because they have several points of resistance that they have to break before they become anything of import. More often than not, I've found myself on the losing end of them. What I would prefer to do is to watch them and look for signs of exhaustion in the rally. Once they appear, the move may be over, plus I can usually get in at a nice price with a smaller stop...that way if the rally isn't over, I've risked very little. The real temptation is to get in too soon. If you try that 3 or 4 times and fail, you've really racked up quite a bit of losing pips, and it's hard to make that back up. So when counter trading relief rallies, be patient on your entry, and jump in small. That'll give you more staying power if it moves against you. Make sure you know where your resistance and support lines are as they often provide the very best entries. Finally, don't be too greedy. Get 20-30 pips and take some off the table. Let a smaller portion ride for that homerun. Also, set your stop to break even, when you take a bit off the table. Then you're home free with a guaranteed profit. Remember, a profit a day keeps the bill collector away!
Happy trading!
Bill
www.thefxtradingmasters.com
But what will happen in the days ahead? Does this big move portend a change for the bulls? Probably not. It is a big move, but when viewed from a distance, we see it currently halting at previous resistance just below 1.5700. Now a couple of 4 hour closes above that level, a pullback to 1.5700, and then a bounce...that would change the outlook dramtically. But without that, we are left into a channel, until we get a move up or down. Currently, we've seen the pair very well bid around 1.5500.
But relief rallies also cause another phenomen, sympathy moves. Particularly in this case we've watched the euro climb higher on the back of the sterling and the swissy has been something of a beneficiary also. As a rule, I don't like to jump onto relief rallies. Mostly because they have several points of resistance that they have to break before they become anything of import. More often than not, I've found myself on the losing end of them. What I would prefer to do is to watch them and look for signs of exhaustion in the rally. Once they appear, the move may be over, plus I can usually get in at a nice price with a smaller stop...that way if the rally isn't over, I've risked very little. The real temptation is to get in too soon. If you try that 3 or 4 times and fail, you've really racked up quite a bit of losing pips, and it's hard to make that back up. So when counter trading relief rallies, be patient on your entry, and jump in small. That'll give you more staying power if it moves against you. Make sure you know where your resistance and support lines are as they often provide the very best entries. Finally, don't be too greedy. Get 20-30 pips and take some off the table. Let a smaller portion ride for that homerun. Also, set your stop to break even, when you take a bit off the table. Then you're home free with a guaranteed profit. Remember, a profit a day keeps the bill collector away!
Happy trading!
Bill
www.thefxtradingmasters.com
Friday, August 13, 2010
Forex and the Stellar Euro GDP
We've all heard the saying that "No news is good news."
But what about this one, "Good news is no news." Something doesn't quite seem to fit. Good news should cause rejoicing, jubilation, cheer and enthusiasm. Today we witnessed great news out of the Eurozone, but nobody clapped. Nobody cheered. Nobody stood up and gave a toast.
The Eurozone was forecasting 2nd quarter avanced growth of+0.7% and a year over year figure of+1.4%. So when the data was released that the 2nd quarter figure was really +1.0% (and the year over year was +1.7%), an astounding 30+% surprise, the euro should have shot through the roof. I've seen similar positive surprises move a currency 200 pips in just hours. But what did we get? Bupkiss. Zero. Zilch. Nada.
What gives? It seems that underneath the surface lies a bubbling uneasiness. A fearful restlessness that perhaps the data isn't what it appears. After all, where is the spending in Europe? Where is the Manufacturing or Industrial production? Where are there any real signs of inflation? And if they really are producing all this stuff, who else in the world is buying it?
I have often bemoaned to you my leariness of government generated reports. Those who have a vested interest in them certainly can influence their release or the way in which they are calculated at the very least. The eurozone is the worlds' second largest economy by some measures, and the largest by others. There is no way that the world's largest economy comes out with a 30% surprise and it doesn't move the markets. Either traders think they are lying (can I see a show of hands?) or the markets are so fearful of other macro debt issues that this tier one data becomes second fiddle.
Either way, we may be in for quite a decline in the currencies. Goldman Sachs has reported that they feel there is a 50/50 chance of a double dip recession here in the US. They are a bit late for the millions who have lost their jobs and remain out of work, but I guess we can welcome them to the party. Nothing like pointing out that there is an 800 pound gorilla in the room. Nevertheless, when GS speaks, the lemmings listen. NOW they are afraid. This could spark another massive US dollar rally like the one that ended '08.
Let's see, 2010 has seen record foreclosures countrywide. We have had more banks fail this year than at the height of the credit crunch. The unemployment rate is still hovering at its highs (and would be higher if the government would actually tally up the people who have quit looking for work altogether...but somehow they aren't worthy of being counted).
Credit debt is down, savings are up, confidence is on the wane...any of this sound like a recovery to you? Hold onto you hats...this could get very interesting!
Have a great weekend!
Bill
www.thefxtradingmasters.com
But what about this one, "Good news is no news." Something doesn't quite seem to fit. Good news should cause rejoicing, jubilation, cheer and enthusiasm. Today we witnessed great news out of the Eurozone, but nobody clapped. Nobody cheered. Nobody stood up and gave a toast.
The Eurozone was forecasting 2nd quarter avanced growth of+0.7% and a year over year figure of+1.4%. So when the data was released that the 2nd quarter figure was really +1.0% (and the year over year was +1.7%), an astounding 30+% surprise, the euro should have shot through the roof. I've seen similar positive surprises move a currency 200 pips in just hours. But what did we get? Bupkiss. Zero. Zilch. Nada.
What gives? It seems that underneath the surface lies a bubbling uneasiness. A fearful restlessness that perhaps the data isn't what it appears. After all, where is the spending in Europe? Where is the Manufacturing or Industrial production? Where are there any real signs of inflation? And if they really are producing all this stuff, who else in the world is buying it?
I have often bemoaned to you my leariness of government generated reports. Those who have a vested interest in them certainly can influence their release or the way in which they are calculated at the very least. The eurozone is the worlds' second largest economy by some measures, and the largest by others. There is no way that the world's largest economy comes out with a 30% surprise and it doesn't move the markets. Either traders think they are lying (can I see a show of hands?) or the markets are so fearful of other macro debt issues that this tier one data becomes second fiddle.
Either way, we may be in for quite a decline in the currencies. Goldman Sachs has reported that they feel there is a 50/50 chance of a double dip recession here in the US. They are a bit late for the millions who have lost their jobs and remain out of work, but I guess we can welcome them to the party. Nothing like pointing out that there is an 800 pound gorilla in the room. Nevertheless, when GS speaks, the lemmings listen. NOW they are afraid. This could spark another massive US dollar rally like the one that ended '08.
Let's see, 2010 has seen record foreclosures countrywide. We have had more banks fail this year than at the height of the credit crunch. The unemployment rate is still hovering at its highs (and would be higher if the government would actually tally up the people who have quit looking for work altogether...but somehow they aren't worthy of being counted).
Credit debt is down, savings are up, confidence is on the wane...any of this sound like a recovery to you? Hold onto you hats...this could get very interesting!
Have a great weekend!
Bill
www.thefxtradingmasters.com
Wednesday, August 11, 2010
Forex after the August FED
Many were looking for some disappointing news from the Fed yesterday, and they delivered. The initial reaction was a dollar sell-off as the Fed offered a dour outlook for the US and global recovery. Not that there isn't a recovery, but it is certainly hard to find. I love governmental euphemisms. In spite of all the stimulus already launched into the world during this depression, inflation rates are not rising. And that was the primary goal. Why? Why would governments want inflation to rise? Isn't that a bad thing? Not in the twisted world of "government-speak". Rising inflation is generally viewed as an indicator that the economy is heating up. Jobs are being created, people are spending and borrowing, asset values are climbing. Of course, when inflation gets too hot, the Fed will attempt to stop it by raising interest rates. This stops borrowing, job creation, and asset price growth. How?
It stops borrowing because people and businesses find it expensive to do so. It stops job creation, because companies cannot borrow at lower rates to expand. No expanding, no hiring. It halts the growth of asset prices, because people can't pay more for an asset plus pay more in interest. It will be one or the other. And since interest rates are out of their control, when they are rising, asset values are falling. This stops, or at least slows, economic growth. So the Fed is looking for some rise in inflation to signal that the economy is lifting. But turning over every rock they can find, the can't find inflation. Nor is all the money given to banks being lent out. This would help inflation rise. But the banks are in worse trouble than most families, and they know it. With falling asset values, they are stuck with under, and non-performing, loans. As more and more homeowners decide they are better off to leave their current mortgages, and "stick it to the man", the banks are truly "stuck". And when businesses go belly up, they don't worry about repaying their loans either. All in all, the recovery is on shaky ground.
Thus, when traders gave further consideration to what is happening, a flight to the dollar became the real answer. Safety. Liquidity. These are what the USD have to offer. Could this become a full fledged double dip? Certainly. Does anybody want to talk about that? Nope. Will the dollar benefit if a double dip occurs? You bet. Stay tuned, and we'll see how all this plays out.
Happy trading,
Bill
www.fxtradingmasters.com
It stops borrowing because people and businesses find it expensive to do so. It stops job creation, because companies cannot borrow at lower rates to expand. No expanding, no hiring. It halts the growth of asset prices, because people can't pay more for an asset plus pay more in interest. It will be one or the other. And since interest rates are out of their control, when they are rising, asset values are falling. This stops, or at least slows, economic growth. So the Fed is looking for some rise in inflation to signal that the economy is lifting. But turning over every rock they can find, the can't find inflation. Nor is all the money given to banks being lent out. This would help inflation rise. But the banks are in worse trouble than most families, and they know it. With falling asset values, they are stuck with under, and non-performing, loans. As more and more homeowners decide they are better off to leave their current mortgages, and "stick it to the man", the banks are truly "stuck". And when businesses go belly up, they don't worry about repaying their loans either. All in all, the recovery is on shaky ground.
Thus, when traders gave further consideration to what is happening, a flight to the dollar became the real answer. Safety. Liquidity. These are what the USD have to offer. Could this become a full fledged double dip? Certainly. Does anybody want to talk about that? Nope. Will the dollar benefit if a double dip occurs? You bet. Stay tuned, and we'll see how all this plays out.
Happy trading,
Bill
www.fxtradingmasters.com
Tuesday, August 10, 2010
Forex and the FOMC
Forex trading around the news is not for the faint of heart. Nor is it for the inexperienced or undisciplined. We have recently seen several big news items that have crossed the wires, that have produced muted responses. this is interesting considering where we currently stand in the make-up of the total retail trader population. More retail traders have closed their accounts in the last 60 days than at any time on record. But just as fast as they have folded up their tents and gone home, new traders have filled their void. These new traders have not seen a volatile news report. Although the recent round of profit taking...250 pips in the sterling in just over 24 hours...is pretty breathtaking.
But perhaps lulled into a false sense of security that there are a lot of "chicken-littles" when it come to news trading, they may be ready to pounce on the announcement today. The recovery, as I have been saying for some time, is not what it has been cracked up to be. Where there are no jobs, there is no recovery. Repeat that to yourself every day, and it will keep your head clear about where the US is headed as an economy. And please remember, Government created jobs DO NOT COUNT. This is why the stimulus failed the first time. Government cannot create jobs. It cannot create wealth. No one can spend their way to riches. Any plan that calls for more spending as the solution is a crock. The more you spend, the deeper in debt you go. You do not get richer. Stimulus, if it is hinted at today or employed in the not too distant future will only hurt the economy in the longer term. Like cocaine to the addict, or alcohol to the drunkard, it will ease the pain for a while, but it only reinforces the fatal spiral. We know this to be a fact.
However, what we don't know is what the market reaction will be. Typically, I would look for the use of stimulus to cause a sell off on that currency. Stimulus means more debt, and it also means a longer period of time until interest rates are raised. this is the death knell for a currency. Therefore, as such, more stimulus should lead to a sell-off for the USD. But these are not normal times. The market may very well respond with a USD rally. Why? Because stimulus gives the "people" money to spend (supposedly). But I'll ask all my American readers, did you get more money to spend form the record breaking amounts of stimulus in 2008? I sure as heck didn't. I wouldn't look for this time to be any different.
But it is the perception that will move the market. if traders feel that the US is finally doing enough to turn the corner, they will begin buying the dollar. And as it has a nice jump start on the move and bounce off of April lows in the USD index, that might really fit the bill. For me, the better part of wisdom says stand aside today.
Happy Trading!
Bill
www.thefxtradingmasters.com
But perhaps lulled into a false sense of security that there are a lot of "chicken-littles" when it come to news trading, they may be ready to pounce on the announcement today. The recovery, as I have been saying for some time, is not what it has been cracked up to be. Where there are no jobs, there is no recovery. Repeat that to yourself every day, and it will keep your head clear about where the US is headed as an economy. And please remember, Government created jobs DO NOT COUNT. This is why the stimulus failed the first time. Government cannot create jobs. It cannot create wealth. No one can spend their way to riches. Any plan that calls for more spending as the solution is a crock. The more you spend, the deeper in debt you go. You do not get richer. Stimulus, if it is hinted at today or employed in the not too distant future will only hurt the economy in the longer term. Like cocaine to the addict, or alcohol to the drunkard, it will ease the pain for a while, but it only reinforces the fatal spiral. We know this to be a fact.
However, what we don't know is what the market reaction will be. Typically, I would look for the use of stimulus to cause a sell off on that currency. Stimulus means more debt, and it also means a longer period of time until interest rates are raised. this is the death knell for a currency. Therefore, as such, more stimulus should lead to a sell-off for the USD. But these are not normal times. The market may very well respond with a USD rally. Why? Because stimulus gives the "people" money to spend (supposedly). But I'll ask all my American readers, did you get more money to spend form the record breaking amounts of stimulus in 2008? I sure as heck didn't. I wouldn't look for this time to be any different.
But it is the perception that will move the market. if traders feel that the US is finally doing enough to turn the corner, they will begin buying the dollar. And as it has a nice jump start on the move and bounce off of April lows in the USD index, that might really fit the bill. For me, the better part of wisdom says stand aside today.
Happy Trading!
Bill
www.thefxtradingmasters.com
Friday, August 6, 2010
Forex and the August NFP
A shock to the system!
Amid prognostications for a better than expected employment report...on hopes that the private sector had done enough hiring to offset the 150 census jobs lost in the government...believing that the stimulus was finally settling in and having it's effect...we get a whopping surprise to the downside with only 70K private hires (versus 90 expected) and -131K jobs (versus the 65K expected).
Recovery? Doesn't look like it here from my view in the cheap seats. In my private alert service this morning I outlined several reason why we could have gotten a strong surprise to the upside in the jobs report today.
1. Planned layoffs fell by nearly 60% from the previous month according to Challenger Gray and Christmas.
2. ADP (the private payroll people) reported an increase of 42K private sector jobs, well above the 19K for last month. Also, as ADP has undershot the private sector hiring from the government report for 7 of the last 10 months, we had a good "bet" that they did it again!
3. The service sector of the ISM data jumped from 53.4 to 54.8, a big move, and the employment index broke above the 50% expansion figure!
So I asked my readers..."does this guarantee an upside surprise in the NFP?" The answer? NOT HARDLY. And not hardly is what we got.
The real question that traders will be asking themselves now is, What does this mean for the "recovery". I have maintained loud and long that I believed this recovery was more shadow than substance. You can't have a recovery without jobs. And while it appeared for a while that the economic jobs engine might be sputtering back to life, the last two months have given us an entirely different picture.
So back to the real question. If the US is not recovering, and it is becoming clearer that China will not take its' place (as it has followed the same failed economic policies), will we be in for another turn down in the depression? Yes, rates will stay low. But that has not helped the stock market with its relatively thin run up. Will the Fed issue more stimulus? How can it not? It shouldn't, but NO ONE there has the backbone to say what needs to be said and do what needs to be done. It is the massive debt, public and private which has brought all this upon us. And the only way out is to work off the debt. And that does not mean by raising taxes on an already overburdened capital system. The very best thing that the government could do, right now, to effect a change, is to bring home all of our soldiers (each one overseas cost more than 1 million dollars per year), cut the federal bureaucracy in half, cut spending by 50% across the board for everything, eliminate the progressive income tax (for starters), and cut 50% of all other taxes and fees, eliminate the multitude of wasteful programs and departments that are NOT mandated by the US Constitution, and stop welfare entirely. Lots of folks think that would lead to riots in the US. And they're right. So we'll have to put some of the savings into law enforcement. But rioting people eventually stop. At some point they have to eat. And in order to eat, they have to get a job. And believe me, when people and corporations are saving under my plan...jobs will explode! There will be plenty of work for any one who wants it. The problem remains that there are plenty of people who DON'T want to work. St Paul offers this government free solution; "If a man doesn't work, he does not eat". Cruel? No. Effective? Yes. Of course, the government may have to have a gun giveaway program so that homeowners can protect themselves. It might be the only government giveaway I would ever support.
Granted, this is a pretty broad outline, and very basic. It requires a tough on crime approach for those who still refuse to work and would rather steal and pillage for a living. The 3 time loser law of the old west would be effectively restored. It means the gov't would live on a fixed income, while the rest of us have the chance to earn as much as we want without being penalized for it.
To make a long rant short, the gov't had better cut the private sector loose if they want to see job creation. Eliminate ALL taxes on business. Only individuals would pay, and everyone would pay an equal amount. Period. This is the only way out from where we are.
All that being said, we are now looking to see if the rest of the world is going to sell off the dollar in the weeks to come, or if fear of another leg down is going to enter the market. Exciting times!
Happy Trading!
Bill
bill@thefxtradingmasters.com
www.thefxtradingmasters.com
Amid prognostications for a better than expected employment report...on hopes that the private sector had done enough hiring to offset the 150 census jobs lost in the government...believing that the stimulus was finally settling in and having it's effect...we get a whopping surprise to the downside with only 70K private hires (versus 90 expected) and -131K jobs (versus the 65K expected).
Recovery? Doesn't look like it here from my view in the cheap seats. In my private alert service this morning I outlined several reason why we could have gotten a strong surprise to the upside in the jobs report today.
1. Planned layoffs fell by nearly 60% from the previous month according to Challenger Gray and Christmas.
2. ADP (the private payroll people) reported an increase of 42K private sector jobs, well above the 19K for last month. Also, as ADP has undershot the private sector hiring from the government report for 7 of the last 10 months, we had a good "bet" that they did it again!
3. The service sector of the ISM data jumped from 53.4 to 54.8, a big move, and the employment index broke above the 50% expansion figure!
So I asked my readers..."does this guarantee an upside surprise in the NFP?" The answer? NOT HARDLY. And not hardly is what we got.
The real question that traders will be asking themselves now is, What does this mean for the "recovery". I have maintained loud and long that I believed this recovery was more shadow than substance. You can't have a recovery without jobs. And while it appeared for a while that the economic jobs engine might be sputtering back to life, the last two months have given us an entirely different picture.
So back to the real question. If the US is not recovering, and it is becoming clearer that China will not take its' place (as it has followed the same failed economic policies), will we be in for another turn down in the depression? Yes, rates will stay low. But that has not helped the stock market with its relatively thin run up. Will the Fed issue more stimulus? How can it not? It shouldn't, but NO ONE there has the backbone to say what needs to be said and do what needs to be done. It is the massive debt, public and private which has brought all this upon us. And the only way out is to work off the debt. And that does not mean by raising taxes on an already overburdened capital system. The very best thing that the government could do, right now, to effect a change, is to bring home all of our soldiers (each one overseas cost more than 1 million dollars per year), cut the federal bureaucracy in half, cut spending by 50% across the board for everything, eliminate the progressive income tax (for starters), and cut 50% of all other taxes and fees, eliminate the multitude of wasteful programs and departments that are NOT mandated by the US Constitution, and stop welfare entirely. Lots of folks think that would lead to riots in the US. And they're right. So we'll have to put some of the savings into law enforcement. But rioting people eventually stop. At some point they have to eat. And in order to eat, they have to get a job. And believe me, when people and corporations are saving under my plan...jobs will explode! There will be plenty of work for any one who wants it. The problem remains that there are plenty of people who DON'T want to work. St Paul offers this government free solution; "If a man doesn't work, he does not eat". Cruel? No. Effective? Yes. Of course, the government may have to have a gun giveaway program so that homeowners can protect themselves. It might be the only government giveaway I would ever support.
Granted, this is a pretty broad outline, and very basic. It requires a tough on crime approach for those who still refuse to work and would rather steal and pillage for a living. The 3 time loser law of the old west would be effectively restored. It means the gov't would live on a fixed income, while the rest of us have the chance to earn as much as we want without being penalized for it.
To make a long rant short, the gov't had better cut the private sector loose if they want to see job creation. Eliminate ALL taxes on business. Only individuals would pay, and everyone would pay an equal amount. Period. This is the only way out from where we are.
All that being said, we are now looking to see if the rest of the world is going to sell off the dollar in the weeks to come, or if fear of another leg down is going to enter the market. Exciting times!
Happy Trading!
Bill
bill@thefxtradingmasters.com
www.thefxtradingmasters.com
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