Kruger Insights Friday – December 20, 2013 by FirstMacro

BinaryOptionsNow | Published on December 20, 2013 at 3:20 pm

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Joel Kruger

Enter Holiday Trade – Everything changes from now through the next 4 weeks. Markets may move a lot or may do very little, but from today, desks will start to lighten up significantly, with all of the big players taking leave for the Christmas-New Year’s holiday. Overall, nothing too surprising in the currency price action this week, with the US Dollar still showing good demand across the board. Even the Euro managed to fall in line, and has since come back under pressure after a period of isolated outperformance. The big disappointment for me has been the lack of follow through from a very pretty bearish weekly set up in US equities last week. Last Friday’s close set the stage for the start to a healthy correction in the market, and yet, bulls remained in full control, to easily negate this formation, even in the face of a mid-week Fed taper. Clearly market participants have been encouraged by the Fed’s commitment to accommodation, even after the taper, and this has helped to fuel these latest gains. Yet I still contend that additional upside moves will be hard to come by and the equity market should soon start to feel a little more pressure as the realities of contending with a still recovering economy, in a world without the same Fed support, start to kick in.

kruger insights december 20, 2013

Gold Back To $1000? – Elsewhere, on the commodity front, GOLD has been a headliner, with the yellow metal breaking down to finally approach the critical multi-month lows at $1180 from late June. Things could get really interesting over the coming weeks, with a clear break below $1180 potentially opening the door for a fresh downside extension back to major psychological support at $1000. I like the idea of looking to buy GOLD into a dip like this, but will be waiting for the right opportunity. Back over to currencies, EUR/CHF has been a market I have been talking a lot about in recent weeks, and it has finally been getting a little more attention after breaking down below 1.2200 this week. Although the price has since recovered back above the figure, I still feel there are legitimate downside risks here, and believe the implications of a test on 1.2000 would be huge on a macro level. A 1.2000 breach would not only call into question the credibility of the SNB, but would also expose other central banks active in intervention, like the Fed and BOJ. Tactically, I remain short risk, and have been exercising this view in the currency markets through the New Zealand Dollar. I hold a short NZD/USD position from 0.8350, and recently established a long AUD/NZD position at 1.0897. I really like both of these trades and will be looking to hold both well into the first quarter of 2014.

New Frontier – As highlighted on Thursday, I stand ready to take another shot at a short S&P position on a break back below 1800. I have traded this market unsuccessfully this year after twice getting stopped for a loss, and the third time this week taken out at break-even, but am prepared to continue to take my shots as I whole heartedly believe this market is poised for a very nice pullback in the weeks ahead. I have also discovered Bitcoin this year and have become increasingly fascinated with the crypto-currency market. While I had some luck with a short recommendation in late November, I certainly am not advocating active speculation. Yet from an academic perspective, the idea is compelling and I will be looking to cover this market more actively in the year ahead. There are a lot of moving parts here, and I am trying to get caught up as quickly as I can. If for nothing else, there are some really bright young minds working in this space and it makes for an exciting time. I’d like to take the time now to wish a very happy and healthy holiday to any of you running off to the slopes or to a warm beach somewhere (I know some of you have plans to do both and I am very jealous). In the end, all that matters is family. This is our biggest and best investment by far. Unlike markets, this investment is guaranteed to produce generous returns if we put in the effort. Let’s make sure to remember this now, and take full advantage. Have a good one.

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