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EurAnalysis Kindergarten 24 replies

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  • #15,181
  • Dec 15, 2011 8:14am Dec 15, 2011 8:14am
Quoting Tyoon
Good US data = risk on EUR?
Yeah, that'd be my take on it...in doom & gloom times such as these any positive news is pounced upon and riskier assets get a bounce....again, just my guess.
The spoken word is your master, the unspoken word your slave.
  • #15,182
  • Dec 15, 2011 8:16am Dec 15, 2011 8:16am
Quoting Tyoon
Good US data = risk on EUR?

Euro is the risk side of the pair

USD is the safe haven

Money seeks yield. Good US data makes traders and investors feel good and increases their risk appetite so they spend their low yielding dollars to buy everything else that can give them a potentially better return on investment than just sitting on cash or low yielding US bonds.

The risk on/off correlation isn't broken on this pair yet. It seems to be breaking down more lately but it isn't broken yet.
I don't care which way the market is going as long as it's going my way
  • #15,183
  • Dec 15, 2011 8:17am Dec 15, 2011 8:17am
Quoting CommercialB
Yeah, that'd be my take on it...in doom & gloom times such as these any positive news is pounced upon and riskier assets get a bounce....again, just my guess.
I haven't quite got the concept of risk on/off. Could you expand a little more on it? I'll appreciate it.

EDIT: thanks PK, still any further explanation would still be of value.

Ok, I think I have got it. Cheers PK.
  • #15,184
  • Dec 15, 2011 8:20am Dec 15, 2011 8:20am
Data on Sales of previously owned U.S. homes from 2007 through October this year will be revised down next week because of double counting, indicating a much weaker housing market than previously thought...
http://www.cnbc.com/id/45659547

that is next week wednesday
16:00 USD Existing Home Sales

That could weaken the dollar short term, and than, o my god, that is bad for the economy, and the risk would be off again. Probably.
  • #15,185
  • Dec 15, 2011 8:29am Dec 15, 2011 8:29am
Quoting Tyoon
I haven't quite got the concept of risk on/off. Could you expand a little more on it? I'll appreciate it.

EDIT: thanks PK, still any further explanation would still be of value.

Ok, I think I have got it. Cheers PK.
Well, lets see if I can beat him to it...

All asset classes in the world are divided into two broad categories, risk on and risk off. When one catagory goes up, the other goes down.

Oil & Euro & stocks are risk on.
Bond, gold (used to be, no longer is) USD are risk off.

If USD goes up, then oil, euros & stocks all go down and visa versa.

So, if the equity markets go up so does the Euro. So if the dow goes up, the usd goes down and the euro goes up. Open up a 5 min chart of the dow and the Euro and you can see them move together in real time.

This classification is nuts, but it showed up around 2008 and has stayed with us since then. Now much of this cross market correlation is maintained by trading bots.
Kill the ego, or it will kill the mission.
  • #15,186
  • Dec 15, 2011 8:32am Dec 15, 2011 8:32am
  •  AFXFin
  • | Joined Oct 2011 | Status: Price don't have a mind of it's own | 915 Posts
Quoting oceanis
Data on Sales of previously owned U.S. homes from 2007 through October this year will be revised down next week because of double counting, indicating a much weaker housing market than previously thought...
http://www.cnbc.com/id/45659547

that is next week wednesday
16:00 USD Existing Home Sales

That could weaken the dollar short term, and than, o my god, that is bad for the economy, and the risk would be off again. Probably.
It appears that lately that many USD estimations has been either over estimated or actual figures miscalculated. That seems to be more rule than exception.
  • #15,187
  • Dec 15, 2011 8:35am Dec 15, 2011 8:35am
Quoting AaronWard
If USD goes up, then oil, euros & stocks all go down and visa versa.
oil is a little more complicated than that. oil gets paid for almost everywhere in usd, so usd gets sold to buy oil, ergo the oil/usd inverse correlation. There are high risk-off scenarios where oil will increase and risk capital will flow to us Treasurys - think middle east political trouble...
"If The Fool persists in his Folly he will become wise." - William Blake
  • #15,188
  • Dec 15, 2011 8:40am Dec 15, 2011 8:40am
Quoting The Fool
oil is a little more complicated than that. oil gets paid for almost everywhere in usd, so usd gets sold to buy oil, ergo the oil/usd inverse correlation. There are high risk-off scenarios where oil will increase and risk capital will flow to us Treasurys - think middle east political trouble...
Yeah, these are all correlations and not firm rules. During the deficit talks USD and stocks went down at the same time. But still, watching the Euro and the Dow dance together for the first time really was a mind blowing experience.
Kill the ego, or it will kill the mission.
  • #15,189
  • Dec 15, 2011 8:44am Dec 15, 2011 8:44am
Quoting AaronWard
Well, lets see if I can beat him to it...

All asset classes in the world are divided into two broad categories, risk on and risk off. When one catagory goes up, the other goes down.

Oil & Euro & stocks are risk on.
Bond, gold (used to be, no longer is) USD are risk off.

If USD goes up, then oil, euros & stocks all go down and visa versa.

So, if the equity markets go up so does the Euro. So if the dow goes up, the usd goes down and the euro goes up. Open up a 5 min chart of the dow and the Euro and you can see them move together...
Wow, great insight, thanks. Hopefully with bots it will stick around longer.

I'm currently looking at the markets on FINVIZ. I can see some of the correlation you were referring to.
  • #15,190
  • Dec 15, 2011 8:46am Dec 15, 2011 8:46am
Quoting AaronWard
Well, lets see if I can beat him to it...

All asset classes in the world are divided into two broad categories, risk on and risk off. When one catagory goes up, the other goes down.

Oil & Euro & stocks are risk on.
Bond, gold (used to be, no longer is) USD are risk off.

If USD goes up, then oil, euros & stocks all go down and visa versa.

So, if the equity markets go up so does the Euro. So if the dow goes up, the usd goes down and the euro goes up. Open up a 5 min chart of the dow and the Euro and you can see them move together in real...
I was up was too early, beating me to anything isn't going to be hard today as I keep falling asleep at my desk LOL

I pretty much watch US Bonds, crude oil, copper, gold, silver and currency futures to get a feel for where the money is flowing and try to judge risk sentiment. I keep FINVIZ futures up on one of my monitors constantly to be able to see at a glance what is going on.

I find it to be helpful to avoid the mistake of fighting the herd when intraday trading and avoid stepping in front of the bus too soon on swing trades
I don't care which way the market is going as long as it's going my way
  • #15,191
  • Dec 15, 2011 8:46am Dec 15, 2011 8:46am
Quoting The Fool
oil is a little more complicated than that. oil gets paid for almost everywhere in usd, so usd gets sold to buy oil, ergo the oil/usd inverse correlation. There are high risk-off scenarios where oil will increase and risk capital will flow to us Treasurys - think middle east political trouble...
Fool, is this kind of info explained in the book you recommended to me - Currency Trading and Intermarket Analysis?
  • #15,192
  • Dec 15, 2011 8:48am Dec 15, 2011 8:48am
Quoting knoholygrail
I am in the breakfast area watching the TV, typing on my notebook computer and next to me is the Philadelphia Cream Cheese Spread.
Mmmm. Stick some in an AirMail envelope and send it to me

Quoting knoholygrail
Please let me know the next time you are in Montreal and I will be your host. First stop Schwartz's for Montreal Smoked Meat. Down the street we have Moishe's a Montreal institution for great steaks.
I certainly will. That sounds awesome.

Quoting knoholygrail
Since you are married I can't take you to another landmark "Chez Paree" unless you get a note from your wife.
No problem. I am sure she would love to join us

Quoting knoholygrail
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Quoting knoholygrail
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Ditto
Those who say it cannot be done should not interrupt those who are doing it
  • #15,193
  • Dec 15, 2011 8:50am Dec 15, 2011 8:50am
Quoting AFXFin
It appears that lately that many USD estimations has been either over estimated or actual figures miscalculated. That seems to be more rule than exception.
I thought fuzzy accounting was in vogue.
I don't care which way the market is going as long as it's going my way
  • #15,194
  • Dec 15, 2011 8:51am Dec 15, 2011 8:51am
Quoting Tyoon
Wow, great insight, thanks. Hopefully with bots it will stick around longer.

I'm currently looking at the markets on FINVIZ. I can see some of the correlation you were referring to.
Actually it is a royal headache.

There is nothing more annoying than watching your winning short on a Euro turn into a losing short because the Americans got some good news. You would think that it would drive the USD up and so give your position a lift. What actually happens is it drives the US stock market up which drives the USD down which drives the Euro up.

However, if you start scanning all the different risk on markets, you will see that things are generally risk off. In fact, of all the risk on asset classes, the dow and oil are probably doing the best and they are not doing all that well.
Kill the ego, or it will kill the mission.
  • #15,195
  • Dec 15, 2011 8:54am Dec 15, 2011 8:54am
Quoting AaronWard
Well, lets see if I can beat him to it...

All asset classes in the world are divided into two broad categories, risk on and risk off. When one catagory goes up, the other goes down.

Oil & Euro & stocks are risk on.
Bond, gold (used to be, no longer is) USD are risk off.

If USD goes up, then oil, euros & stocks all go down and visa versa.
This is why so many people use dow and comidities when trading currency alone.
  • #15,196
  • Dec 15, 2011 8:55am Dec 15, 2011 8:55am
Quoting Tyoon
Fool, is this kind of info explained in the book you recommended to me - Currency Trading and Intermarket Analysis?
been a while since i read it but i recall a whole chapter on oil/usd running thru the history of the assets over the last 40 years.

oil is an interesting subject and if you are loading up on your winter reading here is a good place to start if you want to be oil savvy:

http://ecx.images-amazon.com/images/...500_AA300_.jpg
"If The Fool persists in his Folly he will become wise." - William Blake
  • #15,197
  • Dec 15, 2011 8:56am Dec 15, 2011 8:56am
Quoting AaronWard
Actually it is a royal headache.

There is nothing more annoying than watching your winning short on a Euro turn into a losing short because the Americans got some good news. You would think that it would drive the USD up and so give your position a lift. What actually happens is it drives the US stock market up which drives the USD down which drives the Euro up.

However, if you start scanning all the different risk on markets, you will see that things are generally risk off. In fact, of all the risk on asset classes, the dow and oil are...
So this is why you go to keep an eye on the fundies, markets and charts. Yeah headache but hopefully worth it.
  • #15,198
  • Dec 15, 2011 8:57am Dec 15, 2011 8:57am
Quoting adianto
Attachment

It's Divergence... Buy Or What??
When things get cheap enough, they don't get cheaper as fast as they used to (divergence). However, junk is still junk.
I personally will not buy, but if it corrects upward from here, I will certainly sell again at next strong resistance.
Those who say it cannot be done should not interrupt those who are doing it
  • #15,199
  • Dec 15, 2011 8:59am Dec 15, 2011 8:59am
Quoting PipKiller
I pretty much watch US Bonds, crude oil, copper, gold, silver and currency futures to get a feel for where the money is flowing and try to judge risk sentiment. I keep FINVIZ futures up on one of my monitors constantly to be able to see at a glance what is going on.
Sorry working on 1 hour of sleep in 48 hours.

How do you use FINVIS futures??
  • #15,200
  • Dec 15, 2011 9:01am Dec 15, 2011 9:01am
Philly Fed 10.3

Much better than expected 5.1 number
I don't care which way the market is going as long as it's going my way
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