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Rate Of Spread Between GBP And JPY Spec Bets Cut In Half, And Other Commitment Of Trader Observations

Tyler Durden's picture




 

A week ago we highlighted the major inversion in the non-commercial spec bets between the GBP and the JPY, after the two had been trending with very close correlation for almost a year. This week, after GBP spec bets had hit the highest in over a year, on expectations that the BOE would commence a tightening regime (which we believe are unfounded and largely premature considering the worsening stagflation the UK finds itself in), GBP bets dropped by a the second largest amount in over a year, or by 16,563 contracts (only the 18,788 decline in February of 2010 was greater), to 36,009. And as we suggested last week, when we told readers to "note the surge in GBP bullish bets, and the plunge in JPY. Those willing
to bet that the spec crowd is always one step behind the curve may be
well advised to take the other side of the trade" this is indeed what is starting to happen: the drop in Yen specs was roughly half the GBP decline, at 9,198 to a total of -27,746. In other words the GBP-JPY convergence is starting to play out. Nonetheless with Yen specs at the lowest they have been since May of 2010, this is a level of concern.

GBP-JPY net non-commercial specs and trendlines:

All FX. Note the continuing destruction of the USD. The EUR and the USD continued to trade with a -1.000 correlation.

Next: grains and softs. Slight reduction in spec bets except in Cocoa, which have surged since the Ivory Coast violence.

And last, the distribution of spec bets along the Treasury curve. Most bullishness is in the belly, while the outlook for the 10 Year continues getting worse, and is now at the lowest since August 2010.

 

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Sun, 02/27/2011 - 17:59 | 1002213 4xaddict
4xaddict's picture

Porter Stansberry has an SEC fraud filing against him and is widely regarded as borderline scammer.

Mon, 02/28/2011 - 14:40 | 1004103 GoinFawr
GoinFawr's picture

Faaaack, the whole transcript was there?! I could have just read that epic instead of watching it?!

Aiiigh!

Interesting video, though some of it was a bit more than obvious. I wanted to strangle the narrator every once awhile as I couldn't stop myself from yelling  "Get on with it!" at my screen.

So 'knew' what do you 'know'? C'mon, give it up, what is the 'world's most valuable asset in a time of crisis'? It's a female goat, I just know it... so many uses

And his '100% strategy'; op-ex puts?

Anyway, just being facetious. To anyone that has been watching mainstream media without alternative: I'd recommend you give this a gander, lots of excellent information. I am embarrassed to admit that I did not know just how bad it had gotten in Great Britain in the 70's, though I did have some idea that coin-operated appliances, while making you more 'energy consumption conscious', are hardly a sign that your state has reached the epitome of prosperity.

Thanks for posting RS

Sun, 02/27/2011 - 14:30 | 1001813 99er
99er's picture

USDJPY

Back testing channel and setting up for a climb? Target 86.5.

http://www.zerohedge.com/forum/99er-charts-0

Sun, 02/27/2011 - 14:38 | 1001821 Twindrives
Twindrives's picture

Whatever dude, go smoke another bowl and think about it again.

Sun, 02/27/2011 - 14:54 | 1001849 Harmonious_Diss...
Harmonious_Dissonance's picture

I just took a bong rip & I was thinking 95 at least

Sun, 02/27/2011 - 15:05 | 1001871 Mr Lennon Hendrix
Mr Lennon Hendrix's picture

Dude, dude, resistence is at like 78.  Gotta break that first, and there is another resistance line at 81, dude.  That and the fact that the dollar is not a flight to safety, and dude, things do not look up for the dollar.

Sun, 02/27/2011 - 15:42 | 1001944 Harmonious_Diss...
Harmonious_Dissonance's picture

Better get some hard assets. Speaking of which, my Columbian Gold has not seen the ravages of inflation, gone down in price slightly i daresayit. But that's a cash only market, digital just does not work there.

Sun, 02/27/2011 - 15:44 | 1001942 99er
99er's picture

Weekly chart shows a possible Wolfe Wave target of 101.

http://99ercharts.blogspot.com/2011/02/usdjpy_27.html

http://www.zerohedge.com/forum/99er-charts-0

But I never inhaled.

Sun, 02/27/2011 - 15:53 | 1001973 Orly
Orly's picture

I don't see how you can measure any waveform in price action that has been continually in a downward mode for years. Wave patterns work but not at extremes.  At extreme markets like these, the trader should be using Fibonacci and he says that there is a major level at 81.5 that is about to be tested for the third time.  Third time's the charm.  :D

Besides, in your analysis as a Wolfe Wave, point three is higher than point one, so the Wolfe Wave Theory is invalid and became invalid on 03 February 2011.

___________

 

I, on the other hand, did inhale.

 

And I loved it.

:D

Sun, 02/27/2011 - 15:26 | 1001917 Orly
Orly's picture

Exactly.  If my charts are correct, this could actually get fairly scary.

I still can't wrap my head around the number seventy-one.

:D

Sun, 02/27/2011 - 15:28 | 1001924 Orly
Orly's picture

The EURJPY and the USDJPY are mimics.  EURJPY could see vicious lows- though not all-time lows- at the same time the USDJPY is under severe pressure.

To take up the slack, the mirror is going to be the AUDUSD pair.

Sun, 02/27/2011 - 16:11 | 1002016 99er
99er's picture

Hi, Orly. This is what I have for the AUDUSD.

Weekly: http://99ercharts.blogspot.com/2011/02/audusd.html

Sun, 02/27/2011 - 16:27 | 1002046 Orly
Orly's picture

I'm sorry but the chart is a bunch of lines with numbers.  An explanation would be nice, instead of an assumption that the chart speaks for itself.

I have always wanted the ability to decode signs and symbols; always wanted to be Indiana Jones.  My mother never approved, of course.  It wasn't proper!  :)

Are you saying that the chart is in a down-pattern now because we have reached the fifth peak?

What I see, in general, is a marked area of consolidation in the formation of a rising wedge that extends back to October of 2010.  There is a major Fibonacci level at 0.9852 which has been touched three times with a bounce each time.  Third time...oh, you know.

Next move is to ~1.07.

Of course, I could be wrong, as I have been many times before.  But I do hate snakes!

Sun, 02/27/2011 - 16:35 | 1002057 99er
99er's picture

This is my 60-minute chart of AUDUSD. The lines and numbers describe a Wolfe Wave pattern (see link below) which targets price levels based on Fib retracements. Looking simply at traditional patterns, note that there's a bearish Gartley Pattern here as well.

AUDUSD 60-Minute

http://99ercharts.blogspot.com/2011/02/audusd_27.html

In any case, we'll see in a couple of hours, no?

Link to WWs

http://www.investopedia.com/articles/trading/05/040405.asp

 

Sun, 02/27/2011 - 16:50 | 1002097 Orly
Orly's picture

If I am not mistaken, Wolfe Waves describe a pattern of three points of retracement, all of which are greater extensions of the other, meaning that, in the case of the AUDUSD, point three must be higher than point one and point five must be higher than point three in order for there to be a true WW pattern.

In the chart that you showed me, they're not.

__________

In regard to ABCD patterns in general, including the Gartley, the X-A line establishes a boundary into which retracements carry.  The A-B line, therefore, must be inside the X-A line and retrace to a Fibonacci level inside of that line in order for there to form a point B.  The B-C line then tells you what kind of retracement is being generated; a crab, a butterfly, a bat or a Gartley.  Where the C-point ends up is what desribes the pattern and dictates where point D ends up completing the formation.  That would mean, for instance, that the D-point in the Gartley is a 123.8% retracement of the previous X-A line.

There is no line X-A that has defined the subsequent moves inside of its Fibonacci levels, and so, therefore, to say that there is an ABCD pattern in any form on the AUSUSD pair is a mistake.

Sun, 02/27/2011 - 16:56 | 1002112 99er
99er's picture

Thanks for the input. We could go on and on here but why bother? Show us your chart.

Sun, 02/27/2011 - 18:19 | 1002268 Orly
Orly's picture

Sure.  Pull up my chart on any MT4 platform or any other software you like.  (Let's just forget about Fibonacci's for a moment and focus on simple Bolli's because Fibo's are always "subjective" anyway...)

Please load a USDJPY Daily and Weekly chart.  On the chart, please post Bollinger Bands, at a period of twenty-eight and a Standard Deviation of two.  Now post another Bolli, this time with an SD of zero (BB moving average...).

Notice that on both the Daily chart and the Weekly chart, the price action has pierced through or fallen from the BBMA rather decisively (giant black candles...).  This means that the next stop down is the Lower Bollinger Band, located currently at the 81.358-level, which is below the level necessary to create an "inside Fibo" (aka ABCD...) retracement pattern.

It moves lower or just bounces around.

Your retracement scenario is not ready yet.

Sun, 02/27/2011 - 20:32 | 1002497 99er
99er's picture

This is a follow up chart of AUDUSD where I had a bearish Gartley; it appears to be working so far.

AUDUSD http://99ercharts.blogspot.com/2011/02/audusd_7856.html

http://www.zerohedge.com/forum/99er-charts-0

Gotta go...Oscar Night.

Sun, 02/27/2011 - 20:35 | 1002514 Orly
Orly's picture

I just closed my Ozzie short myself...coz, well, it's Oscar night.

Oh, and gaps get closed from the open about 99% of the time, 99er.  Just saying...

 

The King's English in a massive sweep.  Once again, a film no one has seen will be the "Best" picture.  Go figure.

Sun, 02/27/2011 - 22:48 | 1002839 RoRoTrader
RoRoTrader's picture

Just for the record Orly, I also closed a trade. It was the long OIL I took on the Friday dip thinking no one would want to be out or short into the weekend.

+215 points and the rationale for closing was that $100 is probably the new psych number. A decisive break and hold above $100 may require more catalyst.

Don't know for certain, but am out and up looking for another entry price.

Sun, 02/27/2011 - 20:40 | 1002526 RoRoTrader
RoRoTrader's picture

Orly is right about your charts, 99er.........a bunch of lines and numbers that impy but offer no explanation. No context, no meaning, and not intending to be rude but from what I have seen of your charts over the past 4/5 months my impression is you have been implying a number of tops for the S&P that never materialized.

One other thing; I doubt you can read naked charts either. And as for EW, well, that is all hokus pocus. It has multiple interpretations which are largely subjective and probably belong in the math class for esoterics at MIT.

There are 2 trades I am looking at for AUD/USD. One is long on a decisive break about its ascending triangle pattern and the other is a short at resistance with a tight stop. Maybe I will put on both.

Mon, 02/28/2011 - 00:20 | 1003003 99er
99er's picture

No offense RoRo Trader, but for someone who is a self-proclaimed "trader," you seem unfamiliar with the basics of technical analysis--you know, things like trend lines, channels, support and resistance, chart patterns and so forth. The charts on my Market Commentary forum page have had over 23,500 page views but your comment that the charts require commentary to understand is a first. Good luck to you though in your trading activities.

Sun, 02/27/2011 - 14:39 | 1001823 Motorhead
Motorhead's picture

HIE!

Sun, 02/27/2011 - 15:04 | 1001870 disabledvet
disabledvet's picture

it was the collapse of the US dollar vis a vis the yen that got Chandler's attention and obviously with good reason because is the United States about to default?  Amazingly this did not happen...yet.   I agree "all eyes on the Pound" because it still represents a form of imperial currency.  in short "the Brits still have a fighting army in the field" backed by fiat money.  This obviously cannot be said of Japan and one would expect as a bill paying people the Japanese would enjoy "a better worthless piece of paper" for lack of a more elegant way of putting it and "before the greenback imperial fails" perhaps the GBP will.  The thing is "empires tend to barrel into the problem" so to speak (aren't we all just limited by language in these matters?) by "having feeling they have the ability to physically emliminate" threats real or perceived.  This...."thingy" let's call it "does have it's advantages" and in theory can "cause the generalized worthlessness of fiat money" to be...of "percieved worthiness."  Still...our "default" so to speak as "the consumer of said fiat"(?) must always be towards debt(?) since that is not theoretical nor the interest rate paid (i think, although i've been told that can be controlled too(???)??).  In short "when governments have long forgotten about paying that debt thing" as the USA has done for...ohhh...thirty years or so now--"don't be surprised if the somlulent banker" is suddenly awoken and "starts hurling around financial weapons of mass destruction" for "his own inscrutable purposes."(?)(!)!!..&***$$$.=+  In short "every country could fail in here"...and "maybe even tomorrow."  But take this to heart people--it is not today.  Not today!  Now "happy trading" folks cuz "the market opens at phuckin' 930 AM douche-bag and closes at 400 PM."

Sun, 02/27/2011 - 15:24 | 1001890 Mr Lennon Hendrix
Mr Lennon Hendrix's picture

Fiat is ailing as a store of wealth now.  It never has been such but this is being internalized as the world starves and burns.  The Euro, Pound Sterling, and Yen will all fail, and maybe before the dollar, but will that create demand for the greenback?  No, but it will create , or rather recreate as gold has always been, demand for real monie.  People need a means of exchange that also preserves wealth or else the world returns to island and barter economies.  This will happen last if it does.  Cocoa is a drug, as tobacco and coffee are, and people will crave it for eternity, or at least crave the spec positions until the paper does not trade for it and the concept of price actualizes sans dollar denominated numbers.

The middle of the curve is holding up because Bernanke has placed this current QE (which I would like to call QE number who cares) bet on it.  We monetized the long curve last year, and the only investment position not wholly owned by the Private Federal Banking system, by proxy and otherwise, is short term, and even that is a worthless spe as the return on investment is beyond minimal.  The house of fiat is burning, and now people are starting to flee.  North Africa is first, and with Iraq leading the way, the rest of the Muslim world is set to follow.  Will the "First Worlds" pretend to solve problems by covering them up with the pseudo science of ponzi economics?

Sun, 02/27/2011 - 15:25 | 1001913 Lord Peter Pipsqueak
Lord Peter Pipsqueak's picture

If the experience of the last couple of years is anything to go by,expect an announcement by either Mervyn King, George Osborne or the Treasury that will tank sterling over the next couple of weeks. Any time sterling has shown strength in the last two years,they have whacked it. All this talk of increasing rates is just bullshit.If they do it will only be a quarter now and a quarter at the end of the year and that will only put them up to 1%.This at a time when inflation is conservatively estimated at around 10%(choose your own figure-everyone's is different depending on how much food/fuel they have to buy)that means they are still 9 fucking percent NEGATIVE!!!!

Sun, 02/27/2011 - 15:30 | 1001927 disabledvet
disabledvet's picture

my question is "if we acquire the guns and ammo" but "not as form of self protection" (per se)--is that "the wrong way"?  And just when exactly does "the wrong way" become "the right way"?  If that is (not) the case then "when does the right way" become the "wrong way"?  Or does it just "go bad"?

Sun, 02/27/2011 - 15:33 | 1001929 Orly
Orly's picture

I can't figure out what is the obsession with pro traders with the GBPJPY pair.  Saettele on DailyFx is just drooling after this trade but I don't get it.  It's just going nowhere.  Period.

As long as the BoE can talk up interest rate expectations, the Pound will not falter, especially against the yen.  Once it becomes clear that all of that talk is just that, things will change but that could very well be months from now or even into next year.

Sun, 02/27/2011 - 15:49 | 1001960 Lord Peter Pipsqueak
Lord Peter Pipsqueak's picture

GBP/JPY is known as the "animal" for very a good reason,but I don't trade it, the spread is a killer,but if you can stomach it,it makes big intra-day moves,it has been stuck in a sideways wedge for what seems like forever and recently broke out to the upside. I think this strength will be short lived and ultimately prove to be a false signal.I live in England and like other ZH'ers can see the true state of this country,its prospects and its finances and there is only one word that really sums it up -FRIGHTENING.Do not believe the hype and the bullsit,the UK as major economy and sterling as a currency are finished.

Sun, 02/27/2011 - 17:02 | 1002119 Orly
Orly's picture

My parents-in-law have moved back to Hucknall, Notts.  They can't believe they did that now!  If it weren't for old family, they would go insane.  I feel really, really bad for them to see their country and their culture erode to near-nothingness in a few short decades.

I remember Albert Finney playing a hard-nosed mechanic from Nottingham and thinking how brazen and full of piss and vinegar those boys were; what with the dippity-doo combo-over pufft and the cigarettes rolled into their T-shirt sleeve.  Real men in those days, I'd say.

Now, all there is is poor and lazy medical care, public assistance, yobbers, libs, crime and "Asians."  I could never imagine America just disintegrating that way. If I saw it, I know it would break my heart in two.

Seeing their home fall to pieces must be the most painful thing my folks have ever witnessed.

Sun, 02/27/2011 - 16:20 | 1002027 Mr Pinnion
Mr Pinnion's picture

There s a dogleg back-channel developing nicely in my chfart. This sugests to me its probably a long way to tipperarey and napsacks and kangaroo scrotums are looking bullish!

If , on the other hand the squiggly line drops below the tomato ketchup stain on my PC screen, i think it s fair to say bearish undertones have taken control.

tea leaves dudes, tea leaves

Regards

Ozzy

Sun, 02/27/2011 - 17:05 | 1002121 Orly
Orly's picture

So you trade like I do, Oz?

:D

Sun, 02/27/2011 - 18:11 | 1002240 Mr Pinnion
Mr Pinnion's picture

I dont trade at all.

In a free market ,charts would mean something.

Today it s manipulated in the extreme.

Bullshit markets=Bullshit charts

Ragards

Ozzy

Sun, 02/27/2011 - 21:50 | 1002660 Yen Cross
Yen Cross's picture

I reloaded on GBP/JPY Friday 131.55. Gbp loves usd and net longs in usd are UP.

Mon, 02/28/2011 - 07:52 | 1003395 Lord Peter Pipsqueak
Lord Peter Pipsqueak's picture

"Now, all there is is poor and lazy medical care, public assistance, yobbers, libs, crime and "Asians."  I could never imagine America just disintegrating that way. If I saw it, I know it would break my heart in two."

 

Hi Orly,yep the above pretty much sums it up,sorry to hear about your in-laws having to return to the hell living in England has become.Personally I am counting the days to my retirement so I can emigrate.

The question many people have asked,but probably never occurred to the politicians responsible for the ethnic cleansing of the British from their own country is, who are they going to tax to pay for all the immigrants when there are hardly any working British left to tax!!!

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