Name: vs-trader

Web Site: http://vs-trader.blogspot.com

Bio: Basking in the glory of my own illusions! http://tinyurl.com/2v7f7rr


Posts by vs-trader:

    From Tokyo With Love

    Written by vs-trader
    September 14th, 2010 at 1:47 pm

    Case study for deleveraging and demise of carry trade


    While the equities have not achieved much as the crow flies the USDJPY pair has a good story to tell for the power of deleveraging. Now when you think of Japan, you would imagine the spectacular collapse of the Nippon star, decade long deflationary cycle and developed world govt with highest debt to GDP ratio. Not an example of something which will inspire currency confidence and hence appreciation. But look at USDJPY (look at other pairs EURJPY, GBPJPY or NZDJPY as well) and you will find that after hitting a high of 147 in 1998, JPY is been in a constant down trend and broken out of a massive flat bottom apex in a classic fashion. So what is causing the whole world to buy JPY? Not a deep desire to buy Japanese assets but simply the desire to unwind a carry trade position. On back of envelop basis, if you had borrowed 147 YEN in 1998 and sold that to buy 1 USD and invested that USD, you would still be sitting on that 1 USD asset today (+ dividends etc). However that 1 USD would only get you 83 YEN today so you are short by nearly 64 JPY. That’s a big loss you are looking at.
    Japanese Central Bank has made threats of interventions but I would think that they learn from the experience of our friends at Swiss National Bank who finally threw out the policy of intervention (and failed to stop the rise of CHF). I would think intervention if any would be short lasting and opportunity to buy YEN at weaker prices. I feel the significant low of 79.70 will be broken though that level is likely to offer some support and can be used a first target. I expect once 79.70 is broken, YEN would reach mid 60s level against USD towards Q1 2011. Against other currencies like EUR and GBP the results can be further spectacular. Yen is in a well defined downward channel and an interesting play on world that is deleveraging.

    http://vs-trader.blogspot.com/2010/09/from-tokyo-with-love.html

    Currency | No Comments

    This is the end of the suckers rally?

    Written by vs-trader
    June 29th, 2010 at 4:47 pm

    S&P 500 (ESU0) AND OTHER INDICES

    Most world markets responded strongly from the March 2009 lows and the rally went on much longer than anticipated and killed many a bears. But with fundamentals disappointing for such strong expected recovery and crisis after crisis unfolding it does appear that the rally has run out its time. In the attached weekly chart of S&P500 index, it appears that:

    - Top of the rally as 1219 was a key Fib reversal point for the down move from 1576-666. This indicate start of another big move down. It is quite likely to see lows below 666 but worth assessing that scenario after nearest support point is reached.

    - Medium term top has been formed by Head and Shoulder pattern which has been completed. The projection from current H&S pattern down are looking like 950 – 850 region which is also a point where bulls can regroup and attempt to take the markets higher.

    - The index is below 200d and 50d MA and 50d MA is about to cross 200d MA which is usually a strong bearish signal.

    It would seem appropriate to keep selling the rallies until the pips squeak.

    http://vs-trader.blogspot.com/2010/06/is-this-end-of-suckers-rally-from-march.html

    Markets | Comments (2)

    My Development as a Commodities Trader: BP set for a fall?

    Written by vs-trader
    June 17th, 2010 at 5:51 pm

    My Development as a Commodities Trader: BP set for a fall?.

    BRITISH POUND (6BU0) NOT BP (FORMERLY BRITISH PETROLEUM)

    One can clearly see in a long term chart for British Pounds against USD that it is in a prolonged bear market since November 2007 after hitting the headline grabbing 2.116. After bouncing from multi year double bottom at 1.35-1.37 region, GBP did bounce back strongly BUT it was merely a correction in the longer term picture. The correction was completed at 1.7042 level and since then GBP is falling in line with its longer term trend.

    At current juncture (1.47-1.50 area), GBP seems to be setting up for another short with a possible target in the 1.36-1.34 region possibly setting up a triple bottom. At current price level, the price is near 50 dMA and also near key half way back resistance levels.

    As per current analysis in the attached weekly bar chart, fall to 1.36-1.34 region would complete the down move started from 1.70 region but I do expect that the longer term trend would remain down and after some quick corrective bounces, GBP would start further legs down with possible culmination at 1.25 and in extreme case parity (1.00) level in long term. But at this time these extreme levels are just some mental targets to be refined as the move develops.

    Currency | No Comments