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AUDJPY - ES Correlation: Total Breakdown As ES Now 16 Points Rich

Tyler Durden's picture




 

There was a time, long before central planning was the feces, when stocks and risk in general would correlate with the notion of decoupling, most traditionally represented by the AUDJPY, which has always been the best proxy of Chinese relative strength via the non-pegged Aussie dollar, and the now defunct carry currency of choice- the Yen, a distinction since ordained to the US' very own "reserve" currency. In those long gone days, the ES and the AUDJPY would correlate almost with mirror image perfection. Those days are now gone, and a brief correlation mapping between the performance of the two indicators shows that the ES is now about 16 pts rich to some hypothetical fair value, which however courtesy of abovementioned central planning, is completely useless and irrelevant. Suicidal types may want to play a convergence. In the summer those trades would always close profitably without exception. Lately, that is no longer the case, indicating just how incrementally more busted the market has become in just the last several months.

 

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Wed, 12/29/2010 - 17:11 | 836574 goldmiddelfinger
goldmiddelfinger's picture

Who in his right mind would take the other side of the trade from Ashton Kutchner, Tony Robbins or Waddel & Reed?

Wed, 12/29/2010 - 17:59 | 836686 mikla
mikla's picture

Wed, 12/29/2010 - 18:25 | 836729 Mr Lennon Hendrix
Mr Lennon Hendrix's picture

Gisele.

Wed, 12/29/2010 - 17:18 | 836591 A Man without Q...
A Man without Qualities's picture

Got to get those portfolios looking good for year end.  Reality has been deferred until 2011...

Wed, 12/29/2010 - 17:27 | 836626 Cursive
Cursive's picture

Yeah, that would explain it. The best thing about the coming resetvis we'll lose a lot of these distortions.

Wed, 12/29/2010 - 17:21 | 836604 mynhair
mynhair's picture

Robo chart of the stellar performance from IRE today in 5...4...

Wed, 12/29/2010 - 17:20 | 836606 Id fight Gandhi
Id fight Gandhi's picture

"... And she said Tunisian prostitute? That's my mother in law!"

But really does this market need to make sense?

Wed, 12/29/2010 - 17:24 | 836611 mynhair
mynhair's picture

It better make sense.  I'm not taking every pill is sight for my health....

Wed, 12/29/2010 - 17:21 | 836608 hugovanderbubble
hugovanderbubble's picture

Thanks Tyler and ZH members all your posts, my best wishes for 2011.

 

I cant hold losses in shorts....

 

 

Wed, 12/29/2010 - 17:23 | 836613 101 years and c...
101 years and counting's picture

over the last year, the S&P is 12% (or 133 points) too rich:

http://finance.yahoo.com/echarts?s=%5EGSPC+Interactive#chart8:symbol=^gspc;range=20100103,20101228;compare=audjpy=x;indicator=macd+rsi+mfi;charttype=line;crosshair=on;ohlcvalues=0;logscale=on

 

Wed, 12/29/2010 - 18:18 | 836717 SheepDog-One
SheepDog-One's picture

Yes but now the FED owns the entire stocks and bonds markets...so what other choice do they have but to keep on pumping their own garbage?

Wed, 12/29/2010 - 17:27 | 836622 mynhair
mynhair's picture

More O/T, but how much does that Crammer allocate to ads?  Click on that bastard 100 times a day, and he still doesn't go away!

Wed, 12/29/2010 - 18:09 | 836702 spongeBOB
spongeBOB's picture

There was a little dump in the indexes towards the close.

Wed, 12/29/2010 - 19:12 | 836807 dcb
dcb's picture

today was my target top day on the maket

Wed, 12/29/2010 - 20:20 | 836920 mynhair
mynhair's picture

At least you didn't say 'yesterday'.

There is no top.  The Bernank guarantees this.  To bet otherwise, is to lose your ass.

Wed, 12/29/2010 - 20:42 | 836955 dcb
dcb's picture

not saying it won't go higher, but graphing we are as far away from the channel as we get withoug some correction. last time we kept bouncing along the top of the channel after reaching this distance from it. this happened all the way to the ultimate top last april

longer term target is about 1300

Wed, 12/29/2010 - 20:46 | 836965 dcb
dcb's picture

I also use a speed line which I am convinced that is what the major algos use to trade. so I put my chart, on top of speed line, and use macd. and rsi. then try to narrow down with daily and hourly dropping together, we are getting very close on the daily.

Of note, there isn't a pomo for two days, and after the start of the year the boys won't have to window dress

Wed, 12/29/2010 - 21:13 | 837009 El Hosel
El Hosel's picture

  "The Bernank guarantees this"

    The Bernank guarantees nothing, the SPY has gone nowhere in twelve years... Bet your ass on that.

Wed, 12/29/2010 - 22:23 | 837097 Eric Cartman
Eric Cartman's picture

When Tyler says the AUD/JPY "has always been the best proxy of Chinese relative strength via the non-pegged Aussie dollar, and the now defunct carry currency of choice- the Yen..." what does that mean? Both Asia? I'm sorry, but I don't understand this. But if someone has a second to tell me what I'm missing I'd appreciate it. I've always been fascinated by Tyler's interest in this currency pair. 

Thu, 12/30/2010 - 00:03 | 837187 qussl3
qussl3's picture

People cant play the RMB so they use the AUD as a proxy, it helps that the AUD has such a strong carry.

Thus back in the good old days, AUD/JPY would correlate well with the ES, and one could play the reversions. Howeve,rsince the carry currency of choice seems to be the USD and not the yen, that correlation is breaking down.

Anyone else with a better grasp please shoot me down :)

 

Thu, 12/30/2010 - 05:54 | 837343 Eric Cartman
Eric Cartman's picture

Thanks for taking time out to explain this to me. The fact that the AUD does have a strong carry it does make sense that it would be used as a proxy for the RMB. But what I still don't understand is why, aside from the carry trade and the fact that both currencies are most active in the Asian markets is this so significant to ES during U.S trading hours? 

Wed, 12/29/2010 - 22:46 | 837117 99er
Thu, 12/30/2010 - 08:34 | 837386 Eric Cartman
Eric Cartman's picture

99er, keep it up and i'll report your ass and with the help of others hack your site and render it unusable. You stupid, spamming, useless piece of shit copper fucking dildo. 

Thu, 12/30/2010 - 11:55 | 837682 99er
99er's picture

Copper is a pretty good indicator of the market's appetite for risk; anyone interested in capital markets needs to keep an eye on this commodity. It's topping:

http://99ercharts.blogspot.com/2010/12/copper_30.html

By the way, your language is juvenile. Do you have something up your ass?

Thu, 12/30/2010 - 14:07 | 838061 Hephasteus
Hephasteus's picture

Apparently a whole lot of servants or minions that do his hacking bidding.

Do NOT follow this link or you will be banned from the site!