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Jay Norris
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Jay Norris is a 20-year CBOT floor veteran, author of the Best Seller "The Secret to Trading Forex, Futures, and ETFs: Risk Tolerance Threshold Theory", "Mastering the Currency Market", McGraw-Hill, 2009, and "Mastering Trade Selection and Management", McGraw-Hill,... More
My company:
Trading University
My blog:
Seeking Alpha
My book:
The Secret to Trading Forex, Futures, and ETF's: Risk Tolerance Threshold
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  • Weekly Forex Forecast For September 17, 2012 VIDEO

    To watch our Weekly Forex Forecast for the coming week go to: Trading-U Tube

    Trading involves risk of loss and is not suitable for all investors!

    Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

    Tags: Forex
    Sep 15 2:16 PM | Link | Comment!
  • Have Current Keynesian Policies Changed How Markets Move?

    While the appropriate philosophy is essential for our success as analysts and traders, it isn't something that gets much press. In our case, and that of most professionals, the philosophy would better be called an anti-philosophy. We aren't so interested in reason, values, or causes - hallmarks of a philosophical framework -- as we are in staying on the right side of the market. The "right side" of the market being defined as neither long nor short, but profitable. This is nothing new to traders and merchants from time untold. The old saying "it is not for us to reason why, but to do or die" has always been apropos for business people of all stripes.

    However If there was anything new under the sun for markets it would be that the time gap between the release of real economic date, and how long it takes traders to interpret the effectiveness of government agencies reactions to that data, has virtually disappeared. For example with the U.S. stock market in a full blown bear market in early 2009, the U.S. President signed the American Recovery & Reinvestment Act of 2009 -- See Figure 1. It wasn't until 3-weeks later that the market bottomed. Back then astute investors and traders might have an idea a bottom was near, and wait for a shift in direction and momentum to confirm before entering long positions. Today three weeks would be seen as an eternity for traders to make up their collective mindset and start buying in earnest.

    (click to enlarge)
    Figure 1.

    Underlying market shifts occur much quicker today, and it is undoubtedly because traders pay heed to the influence that central bankers exert on international markets. On September 5th of this year the Australian employment figures came out much worse than expected, at -8.8 versus 5.2 expected. The initial knee jerk reaction was lower prices, which makes sense given it was worse than expected and actually showed negative job growth for the Australian economy. Yet 15-minutes later the Australian Dollar had reversed course higher, and ended up putting in a significant swing low on that day- See Figure 2.

    (click to enlarge)
    Figure 2.

    Now this price reaction comes as no surprise to experienced traders, or anyone who spends time in live markets. Number 1, regardless if the move made sense in the face of the just released economic data, it was in-line with the wide spread belief among active traders that you don't fade central banker's wishes. And number 1a, it was in-line with the long-term price pattern which reflects the prevailing attitude "among active traders that you don't fade central banker's wishes".

    There is no better example of the influence central bankers hold over today's markets than price action in the currency and stock markets these past two weeks. European Central Bank boss Mario Draghi's press conference on September 6th propelled the price of his currency, and global stock indices sharply higher, as did Fed Chairman Bernanke's decision on Thursday to launch QE III. While the two men's actions are not surprising, the outcome they caused in the markets may have been if you were short anything denominated in Euros or correlated to global stock indices.

    Jay Norris is the author of the best selling The Secret to Trading: Risk Tolerance Threshold Theory

    To see Jay point out intraday trade set-ups and signals in live markets on the London / U.S. overlap register at Live Market Analysis

    Trading involves risk of loss and is not suitable for all investors!

    Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

    Tags: Forex, Education
    Sep 14 6:04 PM | Link | 4 Comments
  • Mid-Week Forex Forecast For Thursday September 13th, 2012

    The Aussie dollar initially spiked higher on news that the German high court green-lighted a European bailout fund, but ended the day around where it was trading prior to that news, albeit in positive territory. The AUDUSD over the last week also reaffirmed its status among Western markets where bad economic data is seen as bullish because of the prospects for supportive government action, i.e.: the Keynesian Dividend. The low tick in the AUDUSD at 1.0166 last Wednesday night was posted just moments after Australia reported its job growth dropped to -8,800 for August. Remember the June U.S. non-farm payroll number? It came in nearly 100K less than expected and the Aussie pairs posted the year's low on that same day, while U.S. stocks bottomed the following Monday.

    Despite the sizable rally in AUDUSD over the last five sessions, the day to day pattern remains lower, which is to say this market has retraced only a portion of the August sell-off. A couple of closes above approximately 1.0470 would shift that important pattern back higher. We've been on hold with the Aussie since mid-August when we decided to forego further potential gains because of the risk of being long in the 1.04 handle, when 1.01 or 1.00 gives us a much more attractive risk reward. While we see the Aussie as having several bullish patterns aligned as seen by the series of higher lows on its Daily and Weekly charts - see Daily Chart in Figure 1 - we also can't help but notice the pattern of lower highs. What this means is the Aussie pairs move from being markets where we look to buy dips, to markets where we look to buy dips, and sell rallies, i.e.: we now view the Aussie pairs as counter-trending markets.
    The Aussie like most financial markets should give us a clearer picture following Thursday's U.S. Federal Reserve's FOMC meeting.

    (click to enlarge)
    Figure 1.

    While it was easy to make a case that the German court's decision to support a European bailout fund was already priced into the market, particularly after the Euro's recent sharp gains, not only did price jump 50+ pips higher on the news, but also held those gains. And while we felt that beyond 1.28 was a bit of a stretch last week, we now see the door open to 1.30. While the Euro may be seeing some new bids, we suspect the bulk of the current buying binge is short covering on behalf of Wall Street hedge funds. The big question is are those hedge fund losses in short Euro being offset by long gold positions? For all the buying in le Euro short-term the all-important Secondary Pattern is still lower - see Figure 1 --leading us to believe that the best approach is patience. We'll be shopping for sell set-ups around 1.30, in-line with the Primary and Secondary Patterns, but as always with an open-mind, and attention to risk.

    (click to enlarge)
    Figure 2.

    To see Jay point out trade set-ups and signals in live markets every Monday and Friday for FREE on the London/U.S. overlap go to: Live Market Analysis

    For the video version of our Mid-Week Forecast go to: Video Report 9-13

    Trading is a risky endeavor and not suitable for all investors!

    Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

    Tags: Forex
    Sep 12 7:10 PM | Link | 4 Comments
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