EurAnalysis

I agree that the medium term sentiment is bearish.
In my view, the further up a rally goes, the better a short position one can take.

I'm offline for today.
See you all tomorrow for Europe open.

folks have you seen this?
http://forexblog.oanda.com/20111005/...-intervention/

1.3380

I am pulling these trade possibilities on the 30 the table. I don't like the approach of a slow grind and I have been filled on a $CAD I've had in and watching the $Yen. Don't like more than one or 2 trades on the table at a time.

Hey drtorque,

Just thought I would drop by one more time before I head off.
I just read the article at the link you posted here.
The news is a bit dated as it is all from yesterday and was the catalyst behind the correction. Therefore, the possibility of further easing in the case of worse than expected economic outcomes is already as priced in as it's going to get for now because as you can see from the charts, the correction has lost a lot of steam compared to yesterday.

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Now, for everyone's benefit, this is how I interpret this article:

This is just speculation. No more, no less. Bernanke did not say he would implement any form of QE3. I know this because I watched and listened to his testimony from start to finish. Actually he refused to say anything about QE3 and it was the joint committee members who kept mentioning the printing press. All he said was that the Fed will do everything it could in order to help stimulate should things take a turn for the worse.

The reporter writing the story (probably for sensationalism) wrote the article in such a way as to lead the reader to believe (via the power of suggestion) that QE3 is a probability (as opposed to a mere possibility) Anything is possible but the Fed generally acts on facts and figures, not possibilities.

So, how do we calculate the probabilities of a QE3?

That's the easy part. Don't listen to reporters and don't listen to other traders (They may have listened to reporters). Instead, do your own research.

So, question number 1 I would ask is: Under what conditions would QE3 probably be implemented?
My answer (you have to come up with your own) is US economic conditions taking a turn for the worse.

Okay so in my case, because I believe that it would take a turn for the worse to cause the Fed to start another mass asset purchase program (money printing/QE3), I need to look back in the last 2 to 4 of weeks (putting more weight on more recent data) of US econ data.
So where do I find such data? That's even easier. I can find it in the FF events calendar so there is no need to go googling all over the place.

So off I go and I look at all the data released over the last 4 weeks from the US and I find that the majority of the data came in as expected or better.

Hmmm, interesting. So now I know that although the US is not in good shape, at least it is performing relatively as expected. and my conclusion (you need to come up with your own) is that the probability of QE3 under the current conditions is low because things are not "taking a turn for the worse".

That is how I analyse.

If any of you disagree with this line of reasoning and analysis, I'd like to hear your views. I want to encourage open discussion in this thread as that is the only way we can all become more enlightened. I want to learn also.

Now I must say goodnight.
Chat with you all tomorrow. Big day ahead.

Great thread PipTrapper !

I'm following it almost from the beginning (yes I've read post 1 ).

I'm sitting on my hands waiting for going short.
But right now I think there's too much channel-pressure on the gap-resistance - so it might get broken.
I'm waiting for a clear channel-breakout (close-price) heading south...




Cheers

Pt - very smart thinking. all you're saying makes sense to me, too..

one thing though... the last Fed invention was this "operation twist" , before that it was, no rate hikes until 2013 thing.. if im not wrong (i may be).
when they came up w/these, at most a month ago i suppose, was the economy heading/turning for the worse? i guess not. not significantly at least..
but there was not much of an improvement either.

not much room left w/interest rates, QE2 is done too. so they decided next step would be clearing up the future. so no rates hikes 1-2yrs.. still nothing happening. lets do the twist, come on baby lets twist, let the...

anyways, what im saying is, i think Fed tries to improve the situation, Bernanke tries to act cool, or doesnt wanna bind himself so just says "in case things turn for the worse..."
actually this "dual mandate" thing makes Fedcare about decreasing unemp.

i guess i weight the probability of a QE3 more than you, PT. unless they can come up w/another creative alternative as in twist or what not.
even talk of double dip makes these folks nervous..

other than that, i think your definitely right about the above link, i realized it when you say it.

and from last paragraphs of
http://www.economonitor.com/blog/201...rops-the-ball/

"It seems that Bernanke is more center-right of Fed policymakers than center-left. Which suggests that he will need to be dragged kicking and screaming into another round of asset purchases. And, unfortunately, we will first need to see more citizens added to the ranks of the unemployed for that to happen."

I guess this one supports PT, too..
but I still think QE3 is not too far: as the interestrates are low low, businesses are deleveraging in time. and when rivate sector deleverages, the CB should leverage..

From a macroview, we are heading into the US Christmas season, the only numbers likely to be tremendously weak are retail sales, not unemployment. I would not expect any further fed action until January/February time frame as even Bennie knows operation twist would not have immediate effects even if it worked any more than an interest rate cut would cause unemployment numbers to jump soon. Weak retail numbers won't hit until after Thanksgiving with Black Friday numbers that will almost certainly disappoint, but that is nearly two months away. Near term through then, I don't expect Uncle Ben to lay any cards out that indicate weakening of Fed policy, and there are a few dissenting votes as it is in favor of tightening already, plus pressure from Republicans means there should not be any Fed surprises to weaken the dollar for a bit.

Well said NT!

Fed twist was nothing more than them swapping 400 billion in higher interest short term bonds for $400 billion in lower interest long term bonds. Not what I call intervention. Just a way to cut interest rates without cutting the interest rates in an attempt to entice people and companies to borrow to buy houses and start/expand businesses.

Cutting interest rates is a tool to spur lending, weaken the currency and try to spur growth. A weak currency is great for exports and bad for imports.

I don't consider the Twist or interest cuts as intervention.

Quantitative easing (QE) is when they electronicly introduce more money into the system to provide liquidity. More liquidity (supply) drives down the value of the currency. That's what I call intervention.

Of course the big banks want to see the Feds printing press fired up, they are the ones pushing for it because they are the ones that profit.

While Fed action isn't likely going into this, there will be bumps, such as an American Airlines bankruptcy, and the large numbers of pending layoff mentioned in today's private sector jobs report. But can you seriously imagine Europe going 4-5 clean days without any bad news?

Just when people thought the recession was over and things were looking up, stocks dive and the dollar does well again? Funny how that works.

I sure can't

Well, I was able to nab 25 pips so I got my leverage for the major short coming soon at my predicted resistance 1.341... I'll stand aside until that time... Good luck and may the pips be with you

Please read this as it is pretty much my sentiment there at the end when the climax of the movie is played.

http://seekingalpha.com/article/2976...o-take-control

Hello PipTrapper,

Sorry for the delay been busy with our fundamental analysis and trading. I will try to post on here regularly.

dont bet against the euro??
http://www.bloomberg.com/news/2011-1...ical-will.html

Welcome and thanks osthafen
Thanks for posting and looking forward to more from you
Cheers
PT