Updates

Update: Evening 8th Jan 2016

Well the NFPs have posted a very solid result, as expected but there are some surprises with it as well that are cause for concern, but I will get to that in a moment. The first point I want to clarify is what these results mean. All payrolls posted excellent results for December and had strong upwards revisions for November. This shows a continued firming of the labor market and shows that more and more people are joining the labor force. This is one of the clearest signs of a healthy and productive economy and is evidence that the US, the worlds largest economy, is headed in the right right direction and NOT declining. As labor was one of the FEDs primary concerns, I would expect this report to put them at ease and believe that while they will not do anything at January’s meeting, they will be bullish and have a view to possibly raise by another 25 bps in March. Since the rates market shows that the market is pricing in a less than 50% chance of a raise before June, I believe that this will be positive for USD strength over the next week (as soon as markets calm down more).

Now for some concerns over this report. I did feel that a result over 200k, would bring down unemployment to 4.9%, however in this case, I was wrong and the consensus was right. That is not overly concerning. What is surprising is that wages. I felt that such a firming labor market would put pressure on wages to increase. However, it has not and I do not understand why. In order for inflation to pick up, wages must rise. This is critical to our outlook and our expectation of 3 rate increases in 2016.

Another concern is that if we look at the manufacturing payrolls, 8,000 jobs were added. This contradicts the weak ISM Manufacturing PMI Survey released earlier this week which showed contracting. Perhaps, the survey was not a true indicator this month and did not tell the whole story but at this point, I am left puzzled by the conflicting data. It makes no sense.

Regardless, I fancy the USDJPY at the these levels and will be looking to load up on many mid leverage buys as soon as risk aversion completely subsides from this market. When will this be? As I said two days ago, I do not know and I would not be overly surprised if it persists untill the 19th of January when the Chinese release their GDP data.

Have a good weekend everyone,

 

Mohammed

30 Comments

  1. Hi Mo,

    Maybe something that could explain a little bit about the NFP of december 2015. The employment numbers could be higher due to Christmas? maybe a stuppid thought but considdering Christmas is a very very big thing in the USA they needed more people to do man the counters during christmas , sale after christmas and also the other jobs like all the thousands and thousands of santa clauses? Maybe the figures are temporary “hyped “correctly ?

    Keep up the very good work!

    1. Hey Sea,

      If we look at the services section, we can see that retail sector added only 4,000 of those jobs last week. If anything played a role last month, I feel it could have been the warmer than expected summer weather which would have helped add a total of 45,000 construction jobs. Thanks for the kind words.

  2. Hi Mo,

    Thanks for the update! I am also reading that the mild/warm weather could have had a great influence.
    In any case, NFP should help to reduce risk-aversion. Not sure why the markets are so bearish right now. GBPJPY lost 100 pips in half an hour. Do you have an explanation for that? Or is it just temporary market frenzy?
    By the way, thanks for guiding us through this horrible week.

    Have a great weekend!

  3. I suppose the wage did not increase because all the number add to NFP today came from low-wage, white labor jobs. And maybe the high end xmas is just right among the reasons that put the NFP high.

  4. Hi Mo,

    any reason for the last 1 hour of down trend again? All of a sudden the new trades might further lock out some of us copiers. I have already lost in access of $15k! Any suggestion?

  5. Cheers for the update mo. Man, this has been brutal! No doubt you’re feeling it so I hope you’re alright. Hope to see you all next week and in better times.

    1. Tell me about it. Down $230k of my own on Saxo but luckily only 3 death threats in the last 24 hours (2 less than on Wednesday). Really hope this turns around as expected.

  6. تحيات Ohemgee. What these values can mean to your positions?
    January, 8th, 2016
    20:30 CNY CPI (YoY) (Dec) 1.6% 1.6% 1.5%
    20:30 CNY CPI (MoM) (Dec) 0.5% 0.4% 0.0%
    20:30 CNY PPI (YoY) (Dec) -5.9% -5.8% -5.9%

  7. Death threats, That’s awfull! I don’t know how some people can be so low, surly everybody knows the risks involved in trading, I sincerely hope everything turns around and this doesn’t put you off further trading.
    I for one would like to take this opportunity to thank you for everything you have done. We all really appreciate your daily updates and analysis, the forum and generally just having you around.
    Hope your ok,

  8. You are fully confident for the trades to get back to green in two weeks? On the monthly charts, yes these trades are more likely to achieve the higher levels but what if they go more down. We are in really risky situation. I had myself opened multiple Eur/Usd sells on seeing 292k NFP but later on realized the created jobs are low wage jobs and big boys have not considered it good for USD and then we all see that dollar lost so much in some hours, and it looks like the coming week we may not see dollar getting strength. So, I have set SL nearer and would be hedging the coming week to adjust losses to lower levels. ( Great traders say when you loss you loss, never try to teach the market, because it would teach you a harder lesson)
    For your two trades, gbp/chf and gbp/jpy what are your clear view. I know you understand economy times better than me. I am awaiting your reply. Looking forward to invest with you on HotForex after two three months.

    Thanks

  9. When the going gets though the though gets going..

    I have 4 of your trades open now. If I were to shut down some of the exposure which 2 would you recommend me to close.

    I am rather close to sl but I will not cut them all.

    Keep up the good work Mo! Don’t let them get to you..

    Thanks!

    1. Well hasnt been good work, messed up royally these last two weeks, but did not see so much risk aversion happening. Who could have seen all these events unfolding one after the other. I would hold the usdjpy and gbpjpy if you have to make a choice between two to hold.

      1. Hi Mo, I see the GBPJPY was closed on HF, with weekend rate now attacking 170. We are all hurting with these losses. Yen strength is going to hurt their struggling economy even more, surely a turn around is near. Have set a tight SL now on my etoro copy to see how this week goes which will leave me some capital to recopy when things settle down. Hope PAMM survives as well. Thanks again for all your hard work.

    1. To be honest i believe that the UK economy will surprise all this year and that a raise in rates will happen in q2. I also believe the BOJ will ease more. I dont want to cut positions at a massive loss to see they would be massively profitable in the near future. Made that mistake so many times before. Am already in for over 280k in the red in saxo, 9k in etoro (all in 2 weeks as scary as that sounds). I am willing to wait it out a little more to see if I am right.

  10. Dear Mohammed,

    I have stopped to copy as I saw that this would still go further down thus it would have hit my SL which was set as 95% but I will copy once the liquidity is back in Mid January.
    Lesson learnt, never trade in December to Mid January 🙁 .

    Wish all the guys currently trade to make profit since I didn’t have any funds to add thus I had to bail out.
    I hope and pray that you all guys will turn really green.

    I hope that you could also recover your 280K from your Saxo account.

    best regards,
    Bassam

  11. Where can I see the weekend rates? And can I close them now on the weekend to close on opening rate at etoro or should I wait..

  12. Hello Mo, what a week. Ive cut the positions, accepted the loss and I’m ready to get it back starting with what was left. I didn’t have a choice as I couldn’t add. I was however lucky not to lose the full 95%.

    I’m very sorry for all the people who lost everything. You’re probably not in a great place either having to deal with that and your own exposure.

    For my peace of mind, I would very much like to know in a bit more detail what you think of “hedging” (I know, wrong term, but you know what I mean) and why this wasn’t/isn’t an option for you at least in such extreme circumstances where you are forced to add to your account in order to keep it alive. Many of us weren’t able to do it.

    My other question is, how are you planning to deal with situations like this in the future, should this happen again in the next two years.

    Thanks and hopefully this nightmare is over now.
    Tania

    1. Did not see a point in selling when a.) i believed it would turn. 2.) could not monitor trades 24/7 and if it did thrn would be stuck with sells. Others could open their own sells. Changing my startegy would be the worst thing I could do. It opens areas which I am not comfortable with.
      Not planning to face it again in future. Once I we are in the green closing and leaving Etoro for good and will only focus on My solo trading and options and post updates. The death threats of the last week are a step too far and not accepting that behaviour. Let them deal with the ungenuine people who male multiple accounts to hide their loses and who do not trade. You make 2000% in 5 months and people cry asking for more and expect no risk. You have a terrible month and they threaten to kill you. Im leaving the scumbags to their own demise. P.s. I started reported the death threats so the people who made them, the consequnces are on your shoulders.

      1. Ah mate, I for one am very sorry to hear that, for lots of reasons. Absolutely understand though – eToro needs to address this sort of abuse of the platform. Listen, you are a phenomenal trader, no doubt about that. High risk, high reward. I would love the opportunity to continue to trade with you in good and bad, so if you do decide to stay but with a ‘private’, more protected account I am in full support. See how the rest of January goes. Sadly I suspect malicious messages may be part and parcel of having a blog. But know for every one of those people there are many, many more friends and supporters.
        Fingers crossed we have a better week. It is due!

      2. I am so sorry for what’s happening to you at the moment, karma will come back to those scumbags. Please confirm what will happen with the PAMM, as you mention solo, options, and leaving etoro but not clear about HF. Thanks again.

      3. Ohemgee, it’s sickening. Truly sorry for this. You must already be facing a lot of stress due to the market storm. Having to deal with obnoxious actions on top of that is horrible.
        In Dutch we have an expression saying: “High trees catch a lot of wind”. Whatever you decide in the future like leaving the social trading platforms, it’s your decision and yours alone. Don’t let us change your mind, we are greedy 😛
        In any case, I want to thank you for making this community as I feel it contained a lot of promise to actually help people in honing their skills.

        With regards to hedging, I also thought it would have been a good option. But I am afraid you are right on this one. Basically, I guess seeing other people making huge profits on etoro by shorting is tempting. However, it’s also very dangerous and does not fit the fundamental strategy.

        What are your ideas on the coming week? Japan has a holiday on Monday, so volumes could be very high on Tuesday.
        I have been reading up on some technical stuff, seems like USDJPY could be having a small bullish trend before dropping even lower. Might even be hitting 113.
        GBPJPY seems predestined to fall to 167. Hope that support holds.

        I know you don’t have a crystal ball, but what events on the economic calendar could trigger a reversal in our favour?
        If these events don’t seem to result in a reversal, what should be do?

        Thanks for all the info!

  13. Good evening Mo, sad to hear you will be leaving Etoro, but I totally understand why. What about the Hotforex account? All your hard work is very much appreciated. All the very best my friend. Paul

  14. Hi Mo

    I am sorry to hear that . I started to copy you just in December . Please let me know in which social platform you are going. Share this with me in private if you want

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