Twas the Night Before Holidays....
With the indexes making new highs almost daily what is it that I saw that led me to think that we may be getting ready for a larger correction. I mean after all when you are clearly going against a VERY powerful uptrend there has to be some logic with all the good things happening in the US these days right. Yes it is a financial illusion but its been that way for the better part of ten years.
You can see below from the Neikkei and the DAX that we are having some difficulty making these new highs from the weekly and the monthly chart respectively. You can see last weeks Neikki and make up you mind yourself. Not much has changed to be honest.
I told you many times that I try to zero in on what central banks want and don't want to put it in laymen terminology. They don't want an oil ramp. They don't want a rising interest rate scenario with all the debt. They don't want a dollar that is too strong for the reasons of importing and deporting inflation and deflation. It comes down to a pissing contest to be honest. Someone is going to have to knock the US off its hegemony around the US Dollar being king. I don't really see that happening any time soon.
Put bluntly the spoiled child just ain't ready to give up its toys just yet. I mean giving China useless treasuries to buy their crap is one way to keep the Chinese at bay while the US keeps on making ground in technology which they appear to be doing. Don't think that China is not doing its own techno innovations either but it is harder to see what is really going on there as a lot of it is kept covered up. My experience doing business with the Chinese is they are very savvy and nothing is quite what it would appear.
Now the two indexes I am talking about are key players to central monetary planning. It is no secret that Europe is drowning in a financial and demographic mess. However it is important to note that they have NOT sunk and may never.
You see there is little to give the larger players yield these days other than to keep bidding on stocks (US stocks to be exact). That alone could make yet another correction seem unlikely and that is certainly possible. The trend is clearly to the upside still.
I think the best way to play it is to take out longer term options where you cover yourself regardless of what the markets do. A four legged straddle where you buy both puts and calls simultaneously could keep you from missing out on further highs while at the same time protecting your gains. The bigger problem with this scenario is a total collapse. Your gains will be much smaller but your losses will be smaller also. You make money if we stay sideways. You lose if we collapse and you gain if the market moves up. You can see the Dax making the inverted triangle at the top. This could mean a higher high. However it signifies a major volume area is forming.
Other than these areas I don't see much else on this last week before the holidays begin. If you have done well this year well, then it is time to rest and sip some egg nogg. I would not push it at this time of year if you don't need to. On the last week before the holidays I wish you only the best in the new year and to be safe. Life does not always work out as we planned it but family is always there. For those of you following my thoughts and my trades from my family to yours. Blessings and good wishes.
You can see below from the Neikkei and the DAX that we are having some difficulty making these new highs from the weekly and the monthly chart respectively. You can see last weeks Neikki and make up you mind yourself. Not much has changed to be honest.
I told you many times that I try to zero in on what central banks want and don't want to put it in laymen terminology. They don't want an oil ramp. They don't want a rising interest rate scenario with all the debt. They don't want a dollar that is too strong for the reasons of importing and deporting inflation and deflation. It comes down to a pissing contest to be honest. Someone is going to have to knock the US off its hegemony around the US Dollar being king. I don't really see that happening any time soon.
Put bluntly the spoiled child just ain't ready to give up its toys just yet. I mean giving China useless treasuries to buy their crap is one way to keep the Chinese at bay while the US keeps on making ground in technology which they appear to be doing. Don't think that China is not doing its own techno innovations either but it is harder to see what is really going on there as a lot of it is kept covered up. My experience doing business with the Chinese is they are very savvy and nothing is quite what it would appear.
Now the two indexes I am talking about are key players to central monetary planning. It is no secret that Europe is drowning in a financial and demographic mess. However it is important to note that they have NOT sunk and may never.
You see there is little to give the larger players yield these days other than to keep bidding on stocks (US stocks to be exact). That alone could make yet another correction seem unlikely and that is certainly possible. The trend is clearly to the upside still.
I think the best way to play it is to take out longer term options where you cover yourself regardless of what the markets do. A four legged straddle where you buy both puts and calls simultaneously could keep you from missing out on further highs while at the same time protecting your gains. The bigger problem with this scenario is a total collapse. Your gains will be much smaller but your losses will be smaller also. You make money if we stay sideways. You lose if we collapse and you gain if the market moves up. You can see the Dax making the inverted triangle at the top. This could mean a higher high. However it signifies a major volume area is forming.
Other than these areas I don't see much else on this last week before the holidays begin. If you have done well this year well, then it is time to rest and sip some egg nogg. I would not push it at this time of year if you don't need to. On the last week before the holidays I wish you only the best in the new year and to be safe. Life does not always work out as we planned it but family is always there. For those of you following my thoughts and my trades from my family to yours. Blessings and good wishes.
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