4700 PIPS IN ONE TRADE?! (Premium Signals Service)

Despite surging commodity prices (#China), all 3 variants of CPI inflation in Australia grossly missed expectations, with the headline figure dropping to the lowest ever of 1.4% annualized.

Aussie tanked instantly on the news as market participants now expect a previously hawkish RBA to ease policy via cutting rates in the near future. So much for a cyclical rebound in raw material prices huh?

All eyes set for the biggest macroeconomic event this week.

U.S. FOMC Meeting in a few hours!

In the meantime:

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Bulletin headline from April's FOMC statement:

• FED REMOVES REFERENCE TO GLOBAL EVENTS POSING RISKS TO OUTLOOK

• FED SAYS LABOR MARKET IMPROVED EVEN AMID SIGNS OF SLOWER GROWTH

• FED REPEATS ECONOMIC SITUATION WARRANTS ONLY GRADUAL RATE HIKES

• FED SAYS HOUSING SECTOR IMPROVED FURTHER SINCE START OF YEAR

• FED TO WATCH INFLATION, GLOBAL, FINANCIAL DEVELOPMENTS CLOSELY

• FED: INFLATION BELOW TARGET DUE TO CHEAPER NON-ENERGY IMPORTS

• FED SEES MODERATE GROWTH, STRENGTHENING LABOR MARKET AHEAD

• FED REPEATS ECONOMIC SITUATION WARRANTS ONLY GRADUAL RATE HIKES

Basically as expected. Markets got what they wanted — A "patient" FOMC. The dollar, gold, equities, and bonds in chopping trading post event.

Markets Post April FOMC

The reaction across stocks, USD, gold, and U.S. treasuries post a quasi-dovish FOMC, or what we call a "hawkishly-dovish" statement.

Equities are higher post event as risk flows turn positive after the initial knee jerk lower. SPX is attacking the week's highs as we go to print.

The U.S. dollar is weaker post event after initially ramping, again on a knee jerk. It seems market participants view the April statement as more bearish the dollar than bullish, despite FOMC having removed the emphasis on negative global risks, and reasserting that the labor market is on track to reaching full employment.

Bonds are higher (yields lower) post event, and are perhaps the single most directional asset class here other than equities. Markets clearly view the statement as dovish — Bullish for equites and bonds, bearish for dollar.

And lastly, Gold remains confused after dumping on a knee jerk, then rallying to unchanged, then dumping again before somewhat stabilizing slightly lower pre-FOMC. We note that silver is trading much stronger than gold is.

Fed Leaves Rates Unchanged & June Open For Hike

Following our pre-FOMC primer on what to expect during today's April Fed event, the Fed has once again left the Federal Funds target rate unchanged at 0.25% - 0.50%. We managed to cover the entire event live on our Facebook page, and will therefore be posting content from that venue along with some supplementary comments.


"The aftermath of April's FOMC snoozer. Interestingly, despite all the intraday volatility, crude oil is outperforming every asset class by leaps and bounds, soaring right out of the hole after an initial dip.
Fed funds futures are now pricing in a 23.5% chance (up from 21.6% pre-FOMC) of a June rate hike. Rate hike odds rise rather steeply thereafter for the months of July, September, November, and December, respectively."

READ HERE:
http://www.businessoffinance.com/sni...-open-for-hike

Our latest reaction to the latest, recently-concluded Federal Reserve meeting:

http://www.businessoffinance.com/sni...-open-for-hike

The week's most important market event is over! Of course, we'll definitely be feeling the effects of it to come, but for now...did you make money?

Big market events like the FOMC Meetings can wreak havoc on your account if you are not careful. Always be careful people!

Post FOMC, our Premium Signals portfolio is up. It's been a good night indeed.

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USDJPY is down some 300 pips in the last 3 hours of trading along. The Nikkei 225 stock index is down some 1000 points in the same period. Why?

During its monetary policy meeting today, the Bank of Japan (BoJ) decided to do absolutely nothing other than utter a few words that we've all already grown used to. Remember that the markets were greatly expecting a boost in the BoJ's asset buying program (QQE), a boost in ETF purchases (we've discussed this 2 days back), and/or even lower negative rates. None of that happened.

So it is no surprise that the yen and Japanese equities have reversed about 70-80% of their move over last 6 days in a matter of hours. Such moves based on hope, hope that a central bank would do something, or hopes that were catalyzed by a rumor that a central bank would do something when there is zero concrete evidence that it would actually be true.

We offer our condolences to those traders and pundits who sold heavily into yen weakness or bought Japanese stocks on the basis of that hope. Their ashes are reflected in today's move. RIP.

#Forex #Japan #QE #USDJPY #Stocks #Trading #Investing

We are stunned. Very stunned. For those who undertake volatility, these charts should totally freak you out. Any way you look at it, be it at gross, net, or relative vega exposure; market capitalization; percentage of total futures open interest, the equity volatility (VIX) ETF/ETP market is exploding with retail interest in the past 2 to 3 months, the likes of which we have never seen before. Never ever seen before.

First, looking at Exhibit 1 (top left), market cap of UVXY (ultra short-term VIX futures) topped $1bn last week on Friday, whist vega exposure reached an eye watering 128mn! That is ALOT of vega for one ETF!

Looking at Exhibit 2 (top right), double-levered long VIX ETFs (UVXY, TVIX) have had a vega exposure more than 2.5x in January before retreating to 1.9x that of non-levered ETPs, telling us interest in these double (and even triple) levered VIX ETFs has reached nose bleeding levels. Meanwhile vega exposure on UVXY and TVIX is closing in on 200mn!

Looking at Exhibit 3 (bottom left) truly shows the scale of the capital influx into structured volatile products. Vega exposure in long VIX ETFs accounts for abit 65% of total VIX futures open interest. When the structured product volatility market reaches more than half the size of an actual volatility futures market, maybe it's time to really be concerned. This doesn't even count in short and levered-short volatility products, which to our knowledge has also been extremely popular amongst retail speculators (if not even more popular than long only products). The scale is uber immense.

And lastly, looking at Exhibit 4 (bottom right) net vega exposure o the most liquid VIX ETFs reached 220mn last Friday, an all time high, signaling that retail interest (and exposure) in the volatility market through liquid structured products has never ever been higher.

Does retail know what they're getting themselves into? We are 99% certain that the answer is a big NO. Just wait for the fallout...

#Forex #Stocks #VIX #Analysis #Trading #Investing #WTF

Trading done well brings results like this. Again it's not about being right, but going through the right process. Congrats to those who profited on this signal.

Trade documentation here: http://www.businessoffinance.com/tra...-pays-off-well

#Forex #Stocks #Investing #Trading #Psychology #Mentality #Winning #Attitude

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Brexit or no Brexit, the opinion polls in the English country show a neck-in-neck tie as the Brits ponder hard over this contentious issue surrounding their country's existing membership in the European Union (EU).

They will take to the ballots to cast their vote in a public referendum upcoming in the next couple of months, and that will certainly be the biggest moment of truth as there will o to one definitive answer then.

But in the meantime, GBP (pound sterling) has seen strength against most major currencies. Recall that there was a rather climatic frenzy about the Brexit topic; everyone was talking about the pound going much lower (GBP was in a free fall back then), and that the UK was almost certainly going to leave the EU.

With the benefit of hindsight, we can say that was likely indeed peak pessimism as GBP has since reversed hard from its early March lows. GBPUSD looks technically strong and we wouldn't want to be in the wrong side of this move.
In fact, back in February we advocated gaining a slight exposure to heavily shorted currencies such as GBP. That turned out to be a great call on our end.

It'll be interesting to see how events unfold.

[Click below for ultra large image]

We wanted to do a snapshot of global markets across the asset classes and piece them together in less than 3 canvases. All timeframes on each chart are on the daily period. Each chart has been color coded respectively.
On this image we look purely at currencies grouped by into the U.S. Dollar (Green), emerging market and exotic currencies (Red), and the majors (Violet).

Here you can see where the trends are and aren't. To be honest, almost all the currencies shown here have some sort of trend to them, because they are weighted against the USD, which as you know has been a a major downtrend for some time now (we have talked almost too much about this). This is hence a good relative performance overview on which currencies have been strongest against the USD and which more mildly, and some even weaker against the dollar.

The reds have generally been the strongest except for the Chinese yuan (USDCHN). Weakness in USD has obviously led to outflows into the EM sphere, which has translated into direct gains in EM currencies. The South African rand (USDZAR) and Turkish lira (USDTRY) are prime examples, both of which have been successfully traded on our books (see our Trading Journal on our website).

The Singapore dollar (USDSGD) might be starting to show signs of weakness, in line with the Singapore Central Bank's policy of "zero appreciation" of its currency. The yuan has been relatively muted when it comes to volatility and is only slightly stronger against the dollar. The Swedish krona (USDSEK) has also been strong against the dollar (this can be classified as an exotic, and not part of EMFX) but has gotten more directionless as of late, similar to the euro (EURUSD).

The violets are a mixed bag and are the most volatile from a beta-adjusted standpoint (compared to EMFX). The euro remains in a very choppy medium term uptrend against the dollar much like the New Zealand dollar (NZDUSD). Of all the majors, the Japanese yen (USDJPY) is the strongest, which is no surprise after what the BoJ did (or fail to do) during its April monetary policy meeting this past week.

The Australian dollar has seen great strength against the greenback over the last couple of months, mainly due to the strong up trend I global commodity prices, but has shown impulsive short term weakness since last week after the release of very dismal Australian economic data (lowest inflation on record, which we also covered). The uptrend in the pound sterling (GBPUSD) looks to be the more consistent one that might still just be in its former stages (Brexit trade unwinding partially or fully?), and looks poised to continue so. The Swiss franc (USDCHF) is a little bit of a mess of we may be honest.

+6% THIS WEEK!

As with most other traders and fellow market participants, we were looking to the U.S. FOMC Meeting in mid-week to see what lies ahead for the markets. So far, so nothing new. We learned that the U.S. Federal Reserve has little intention to raise interest rates, although bets are open for a June rate hike. The economic indicators are not too supportive of that at the moment, with only unemployment indicators showing an improvement in the labor market. Still, as always, trade what you see, trade what you understand.

Of course, our Premium Signals Service subscribers benefit greatly as usual

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By the way, this was post FOMC performance, and a trade we closed this week for some nice profits

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5300 pips total made on USDNOK!
+6.28% Unlevered Returns!!

A quick update on our USDNOK shorts...

This entry is a follow up to our original Short USDNOK Pays Off Well piece published 9 April 2016. Since then, we have closed out all our trades on USDNOK and have booked a total of 5,370 pips of realized profits. This translates into roughly +6.28% of unlevered returns. This piece is therefore to update readers and followers as well as to provide the last concluding bits of our thoughts.

Read more here:
http://www.businessoffinance.com/tra...-win-5300-pips

http://static1.squarespace.com/stati...8615/image.jpg
The supporting trade ticket for our second short position on USDNOK. This trade was closed out earlier on via a take profit buy limit order at 8.0850. This netted us a profit of 2,360 pips, or +2.83%.
http://static1.squarespace.com/stati...0773/image.jpg
The supporting trade ticket for our base short position on USDNOK. This trade was closed out earlier on via a take profit buy limit order at 8.1650. This netted us a profit of 3,010 pips, or +3.55%.
It must be noted that this trade complex (consisting of a base short and a second short position) was initiated on 23 March 2016, and was closed out (second short) on Friday, 29 April 2016. This means this trade complex was active for more than a month. It gives traders a different perspective to what they normally read on forums and websites, where most traders hardly last for longer than a week.

The supporting trade tickets for our short USDNOK trades:

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nice charts and actually some good results, keep em coming.