The Down Trend Is Ending In the Yen - Signs of Exhaustion in the Commitment of Traders Data

Click on Chart to Enlarge

Click on Chart to Enlarge

The chart on top is the FXY etf which is the Japanese Yen.  The lower chart is the CoT data, but it covers a longer time period than the top chart, so checks the dates for correspondence.

I am pointing it out here because it is displaying one of the most significant and sure signs of exhaustion there is based upon the Commitment of Trader's data.  So this trend appears to be ending, and one could look to initiate speculative longs soon with outstanding reward to risk ratios.

Of note is the horizontal support line.  The low at the beginning of 2014 marks the point of maximum net short by  speculators.  This can be seen in the chart of the CoT data below.  That point is a multi year extreme in net short by large specs.  Even on the move to lower lows in FXY, the specs didn't get more short, so this shows that their selling capacity is exhausted - it is a type of divergence or non-confirmation with the price trend.

Now the other interesting thing here is that when price broke that horizontal support, it led to the smart money/commercials, actually having to sell into lower prices for a few weeks, which is opposite their style.  This is a hallmark of the end of a trend when the commercials have to capitulate and take a massive loss.

I will link here to a post I made about cotton in 2011, because it accurately showed this pattern in reverse - as a topping pattern - on this blog as the top occurred in cotton before a massive bear market took place in the following year or so.

So one could look here to short the USD/Yen pair on appropriate signals.  Also one could look to buy FXY call options with several months to expiration with strikes in the 80-85 range after careful analysis.  Also, YCL is a 2x leveraged bullish Yen fund, which would be used as a leveraged equity play to go long on appropriate signals.

I personally am looking at some call options on FXY, but currently have no position.

Stock Market Update 3-11-13

3-11-13 Stock Market Update

This video is a stock market update covering the S&P 500, QQQ, IWM, with technical indicator review, forecast projections, and analysis of the Commitment of Traders data relative to the current market action.

Multi Market Update

9-29-12 Market Update

The video covers stocks, bonds, gold, oil, CoT data, AAPL.  Tighten stop or exit long equity holdings.

Longer Term Investment Outlook

Click on Chart to Enlarge

This video contains charts and some further details regarding stocks and bonds specifically.  The outlook and advice is pretty simple.  Sell all bonds and move to cash.  Understand that after the 2008 stock market decline, big money has flowed to bonds and that is the class of assets that your investment adviser or financial planner will currently feel safe recommending and be able to show you that has positive returns over the last few years.  But as investors, we have to be savvy and see the risk or potential BEFORE it actually happens, and be willing to act with little to no confirmation from FACT that we have chosen correctly.  THIS IS ONE OF THOSE TIMES.

Additionally the smart money commercial stock futures traders took a big jump in selling this according to the CoT data, and I think we will see that they sold even more heavily through this past week's jobs/unemployment data.  My suggestion is again to sell stocks and move to cash.  The pattern and real money data are becoming increasingly clear that a major market movement is about to take place to the downside.  If you need some initial PROOF, then I suggest that a daily close below 1310 on the S&P 500 be your signal that this current bull market is over, and we will see a rapid price decline.

Again this is investment time frame advice.  So understand that while I think that we truly are very close to seeing a major market shift to the downside and unwinding of some of the "bubble" activity in stocks and bonds, it may be 2-4 years for things to really play before possibly re-investing in a major way.