Closer.
Hi Mike,
this work of yours is the best among all of them! This is great, post it maybe every week or month once! Can you somehow compare your graph to your 15 pairs? Maybe we can see which of the 15 pairs is the very best Major vs. Comms indicator!
Thanks for your great work,
FE
Hey guys.
Soā¦how about some analysis on that chart? (I apologize, Iām not on my original computer, so I canāt give out dates, so Iāll do the best I can now)
The Majors have topped out. This is around day 165. Thatās the 165th trading day of the year. And since then, the Comms have been stronger. I think that means the money has been flowing more with the risk on currencies. And by the way, you can see that the trends are pretty clear and lengthy. Everyone knows that the further out you go, on the time frames, the trends are more predictable.
So, my bottom line out of this, is I will be looking to by the Comms more than the Majors. You know, looking to sell after the rallies.
Thereās so much we can say about what has been the catalysisā this year. Look at the beginning of the year. Remember the CHF??? That took the Majors for a ride. Then the Comms turned it around, around day 20. They were on a roll till day 58. Almost 2 months. I forget, but do you remember when the NZD did all kinds of rate hikes? Probably during that time. Then, China acted against the Comms sometime in the summer. So, it was all Majors throughout the summer. Oh, and how about the oil dive. That contributed much to the Majors strength. But, now heading into the end of the year, the EUR has been losing big time, taking CHF with them. That was weakening the Majors. The GBP hasnāt helped the Majors much this year. More of a hinderance.
Maybe later I can research these dates and put those fundamental events to the graph.
Got to run.
Mike
What lies ahead for the stock market ?
Past few weeks Ive heard some analysts talk about death cross. If youāre unfamiliar with the term Death Cross Definition | Investopedia
Weāve seen death cross formation on S&P late August, then it seemed like the bad times were right around the corner - at least thats how they (analysts) made it seem like. Fast forward 3 months 50 day moving average back above 200 MA. We must be done then it must have been a minor hiccup before another big run up. But are we really done just yet ?
Oil and China played a lead role in recent stock market down moves (correct me if Iām wrong Peter). So I think its right to assume the fate of oil and China will play a key role in deciding if S&P will have another run up or go the other way.
The commodities are struggling with oversupply and decrease in demand. The outlook for oil and other commodities alike remains grim as China transitions from one phase to another. Emerging/Mining economies are under pressure, and I think the situation will remain so through 2016. With that gloomy picture pretty much all across the globe do you really see S&P having another run up ? I donāt want to be overly pessimistic and say that weāre going to be in a bear market soon but in my opinion at best a period of consolidation is very likely than the another run up scenario.
Now what does it mean for the currency market ?
Like I said before I think dollar bulls are exhausted regardless of the Fed hike or wonāt scenario. And with economies struggling/transitioning all around Fed wonāt be on a hike frenzy anytime soon. So what do I buy if not dollar ? youād think if thats the case the commodity currencies are sure to rise up. But commodity outlook remains under pressure. Unless we see those countries transition their economies from one to another successfully and find stability (and it surely will take considerable amount of time : Australia is already on the job) I donāt see commodity currencies making an impressive rally against dollar.
Hereās a scenario that deserves its own part so Iāll briefly talk about it. Imagine what if those commodity based advanced economies shift their focus from mining/commodity based to something else. Iāve got no magic ball but in the mid to long term I think we will no longer consume commodities like coal, oil :talk about renewable energy and electric cars. Theyāre environmentally friendly and thats where weāre headed. When no else is willing to buy the commodity youāre producing will you keep on producing ? no its no longer an option youāll have to adapt to a change thats taking place and find something else thatās in demand. And emerging economies that are dependent on commodity and mining will have to find their own solutions.
If commodity currencies are no longer correlated with commodities what happens to USD and commodity correlation ? Do you see a change happening in inter market relationship that we know of if things were to change ?
Back to what we were discussing just because dollar bulls are exhausted I donāt think comms will magically rally. In fact given the uncertainties up ahead with stock market to consolidate or ā¦ I think safe havens will do well (YEN EUR and CHF) against comms and dollar next year.
whats your take guys ?
Hey Rook
Good stuff! We just cannot argue with any of that. I mean, unless something globally changes, this seems like the path the market will go down. And you make the good point about that it will just take time for the switching of directions an economy would take (Australia).
But, we cannot forget about China. They are gonna be the new kid on the block, relatively soon. And thatās gonna bode good for the Emerging economies as well as AUD, NZD.
Itās funny you mentioned that. I just read an article this am.
World Bank sees no recovery in commodity prices over next 5 years
Mike
OKā¦market sentiment.
Well, this weekā¦belongs to the Majors. And STILL.
Good thing Iām not in. Iāve seen nothing but a domination since the open. But, in order for me to see the M/C split, I must have a running total going. So, on a separate demo account, I have the running totals. This is what it looks like, from the very open this week.
Well, if I was in with the Majors,ā¦manā¦I would be UP that much.
Just waiting still.
Mike
Mike,
I hear you on China. I havenāt read on the details on CNY being included in the IMF basket. But Iām sure thereās going to be a change coming.
I think comms are taking over the majors as I type. London started off mixed. At US open bankers ran down stops on yen at least thats how it appeared to me. Risk is back on. S&P up , oil up thanks to the drop in the inventory. AUD and NZD both enjoyed some ride up against USD and now the CAD the under performer finally catching up.
Iām long GJ thinking if I should short USDCAD. Iāll steer clear from AUD and NZD big day ahead for both of them. Its an unnecessary risk to open any trades now.
Hi PipPhil
I donāt exactly understand the question. It would be better if you posted a picture. Your welcome 
Is your column line āNā? If so, since you are working with more data (5 years), you have to include more rows as well. It is just a guess, again a picture would speak a 1000 words.
Hey Rookā¦
I wanted to chime in here. (Iām going to bed soon, and Iām sure your waking up)
But, I just got in with the Comms now. THEY are finally waking up. Weāll have to see how much they can take back. This week they just got pummeled. So, is this gonna be just a correction, or will they continue on with the trend.
This is the latest data. (Remember, any line going up is the Majors, going down is Comms) .
And that chart is why I think the trend is heading down. I was gonna wait to buy the Comms when it went up to the next lineā¦but hey, itās close enough now.
So, I want the line chart to go down (Comm positive over the Majors).
Iām selling the rallies.
Mike
Beware Mike,
This is probably the reason behind S&P fall few days back and yen strengthened on the back of that drop.
FOMC December hike: Options market could provoke a wave of selling pressure in equities
And more on S&P last update yesterday US close
Asian regional equities closed in the negative weāll see how things progress onto London (again its a mixed open). We might see another sell off in the equities market. If thats going to be the case then comms probably wonāt be having a run up any further.
By the way how did you come up with that indicator looks really cool !
Ok, so I found this. āLarry Williams recommends using a 26-week or a six-month average, but you can use other averages, such as the annual (52-week) or three-year (156-week)ā. Since I am daily trading at the moment I will give the 26 week average a go.
Regards.
Hey guys.
This is how I come up with the line graph. Majors vs. Comms.
15 trades. I add them up. And there will be one result. Itās just a matter whoās on top and whoās on the bottom. Hereās Dec.'s totals.
On the left we have the individual currencies. Grouped. Top 5, bottom 3, and the result in the middle.
In each of the boxās is what they have done against the other team. For exampleā¦USD, on Nov 30th. (First box in top left corner.) If you add up USD/CAD, + AUD/USD, + NZD/USD , for that day, that will equal out to be -133 pips combined. So, thatās what the USD did against the Comms. I do that for each currency. And then all I do is add up all the Majors pips, and Comms pips, (which will be equal). And that will be the result for that particular day.
Then I just put those numbers in the excel line-graph.
All this is telling me is which side is stronger. And showing me the flow. Which I believe is more of a risk on vs. risk off.
Mike
Hey, has anyone used COT Indicator Suite for MetaTrader before on MT4?
If so what do you think about it?
Hi Dutschtrader,
wow, according to my knowledge we have not discussed that until this point in this thread. Do you already install it? I have not chedked if it was for free or for a fee. I am looking forward to discuss it.
All the best,
FE
Yep, thereās one on the official mql site.
Hi Mike,
I do not know about you, but this week is advancing on a very strange way if we are chekcing the Comms. Check out the charts. There are very clear and tradeable setups there. If we go into details though, what we will see is the huge difference between the NZD and CAD. They are both Comms and basically one looks the strongest among all currencies and one the weakest between all of them. This is hard to explain. Or do you have a logical explanation for this phenomena?
FE
Hey Feā¦
Uhā¦yeahā¦I hear ya!
The CAD, in itās own light, independently, has been diverging from the group. More than normal.
See, each currency acts mostly in one of two ways. Either separately, or part of the group. And lately we have been seeing them act independently, apart from the Comms. I think of it as being marked. Bulls-eyed. And probably because of the tie with oil. They have been in the spot light lately. Picked on.
Come to think about itā¦it seems like thereās always someone who is the brunt of the action. I mean, when things are relatively calm, who getās the hit? The JPY.
So, it just makes it tough when we look at the market from the perspective of the two teams. Cause thereās a lot of team playing, and also individualism.
Thatās what I try to do more and more. Weigh all the different members within their camp. Thatās what makes it interesting (and exciting)ā¦where is the tilting coming from? And you have to weigh each and every one of them. I guess itās like their on a see saw. Whoās (or which members) gonna make it tilt one way or the other. And remember, thereās 5 on one side and only 3 on the other.
So, FE, I donāt know if all of that is correct thinking or not, but thatās some of the things that I think about.
Itās common sense thinking, on my part.
Letās take a look at a couple of tables and see some facts.
On the left is my line up. That is what I came up with after last Friday (where they stood on the weekend). You can see the corresponding placements at the end of every day this week.
And this is their running %'s for the month. (top # is the running total % ) (bold #'s are the daily result).
Mike
Guysā¦:44:
Well, what does it look like this week? Iāll tell you what I think.
Majors all the way. As opposed to the Comms.
OK, Mike, no more trying to find bottoms, topsā¦(Iāve realized this week thatās what I must be doing)
Whatās the trend? It is the Majors. Letās break 'em down.
COMMS:
āCADā They have fallen apart. Thanks to Mr. Oil. I just donāt think they can recover, this year anyway. I think they are on the slippery slope till next year. I kind of think the yearās end play is playing out. Also, check out the charts here. This is the weekly charts, from the start of the year. They are at extremes against everyone, except against the NZD.
āAUDā You know, I had hopes for them. (Thatās my problem) But, nope. They are sliding down quickly, and wanting to join little brother in the dumps. And on Friday, it was just ugly for them.
āNZDā Well, one out of 3 isnāt bad. They are the only Comm to have itās head still above water.
But look at Fridayās results. Only 3 currencies were in the negativeā¦ALL COMMS!!
MAJORS:
āCHFā They are dominating the market. You canāt deny the money is going to them. For whatever the reasons are, itās true. Up to this point. I think the trend will continue.
āEURā Well, they are up there also, following big brother. It seems like they had a turn around. I guess the money got tired of selling them for so long, and now onto buying them. I think ever since their meetingā¦you know, more tools they used. Plus I think this is a precursor to what the USD might do. The rise before the fall.
āJPYā Been very strong. And I think they are on the other end of the USD also. See, they tend to follow the USD. But, this past week there has been selling of the USD, but with it, buying of the JPY.
And of course we must mention there has been a running to the safe havens. Which means Majors over Comms.
āGBPā I think they have just been floating. Good days, bad days, but nothing to write home about. Surely not being in the spot light, good or bad.
āUSDā Last but not least the US Dollar. We all know whatās up and coming this week. This event has been the most sought after event this entire year. So, what happened this past week? Surely not a lot of buying. They have dropped, but look at the last 2 days. I think they are winding up for a good boost. One thing that stands out very much, for me, is what happened to the USD/CAD. Do you remember I noted thatā¦either up or down. Well, up it went. (I know, Mr. Obvious here)
But, when I look at that pair, in the light of the M vs C , it is telling to me. See, those 2 are brothers. So, when there is a pretty good divergence (big candle) that tells me thereās gonna be some movement (tilt).
And Majors it is.
Conclusion:
āMajors are on a roll. (Just look at Fridayās results) They are trending high against the Comms. And given the big catalyst coming our way, I donāt think the Comms have it in them to take out Goliath.
And whoās the stronger? Well, it pretty much could be all of them. Safe havensā¦USDā¦EUR (QE money).
Maybe even the Pound. (canāt rule them out)
Mike
P.Sā¦ You know, Iām working on these relationships. And Iām coming up with some good stuff.
Let me leave you with this.
Each currency pair means something!
And Iām trying to document, group, and fashion these in a way in which will prove some direction.
Kind of like how father Peter did with the Intermarket Analysis.
This is gonna be called āInterCurrencyā Analysis.
Hey Mike,
I think AUDNZD sell off did some damage to AUD weakness across the board. Fundamentally speaking Iām not as bullish on NZD as AUD. I think the risks are higher for another drop in GDT than AUD jobs data (a hint that the economy may be picking up in other areas).
As far as currency relations go I like to look at crosses such as AUDNZD and EURGBP for a direction apart from risk on and off assessment to determine individual currencyās strength in real time. EURGBP in itself is a give way if weāre in a risk on or off scenario apart from yen and franc pairs. To see all of this in action is what I enjoy the most. Iām interested in what you have observed.
Now back to market sentiment I think its going to be a risk on day. As for S&P Iām afraid its only a correction.
Hey Rookā¦
Your right again.
I just woke up, and itās London open now. Sure enough, looking at the charts, you are so right. Risk on.
This reminds me of last week at this time. The Majors had it over them and it started with the open. And it pretty much continued the whole entire week. So now, itās the opposite!
The question isā¦is this gonna continue for the whole week?
Plus, did you read Piponomicsā write-up on the three reasons why the USD is topped?
Given all that, (oh and plus I woke up to being down a good bit from the open,) Iām changing over to the Comms.
And everything I mentioned a post agoā¦FORGET!!!
Thanks buddy.
The team to root for is now the Comms.
Mike