I had to laugh this morning when I read about the BATS crackdown on algo FX rigging. One look at USDJPY (which reached our intermediate upside target yesterday) explains why BATS’ actions won’t change anything (other than for some HFT firms themselves — good riddance!)
It certainly won’t make any difference to the FX markets, where the biggest perpetrators of FX rigging are central banks themselves!
The BOJ understands the yen carry trade [see HERE] extremely well. It’s brilliant in its simplicity: crush the yen, and stocks go up. They have control over the yen, and they now own tens of trillions in Japanese and global stocks in a very highly leveraged balance sheet. Of course they’re going to manipulate the yen!
CL, by the way, also hit our downside target when and as expected. From yesterday’s members’ section in Oil’s Plan B:
As such, we should see SPX sell off tomorrow. But, an overnight slump by CL followed by a rebound as SPX opens wouldn’t be a huge surprise… On balance, I’d rather be short than long from here at 2126.
It just slipped down to our target as the cash market is about to open. We’ll find out very soon whether or not that rebound is in store.
With the Shanghai Composite plunging 6.5% overnight, there’s a very good chance.
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