Trends are Still Choppy and Now Techncials are Increasingly Deviating from Fundamentals

Often, when I hear somone say the market doesn't make any sense; I usually jump to the conclusion that they are just confused. Well, count me confused. I can see the technical trends supporting an advance in growth-supported assets and high-yield currencies; but I simpy do not believe in the advance. Without a meaningful expectation of growth, return or yield to offset the growing presence of risk in the global financial markets; there is simply no reason for me to take any meaningful positions that are long risk. And yet, my convictions don't really have any sway over the markets themselves. They can continue to ride on speculative momentum alone for much longer than I can ever fight the move. Therefore, I will maintain my fundamental outlook; but I will be respective of the prevailing winds shorter-termed trades, more restrained money management and greater flexibility.

Point in case for unlinked technicals and fundamentals: today's European debt auctions and the Fed's decision seemed to encourage risk taking. Speculative interest is stoked on the European government's (specifically Greece, Ireland and Spain) to sell their bonds; but their financial difficulties are certainly not minimized and there is admittedly ECB presence with the purchases. For the FOMC decision, the notion that stimulus is a permanent fix and supports investment is already problematic for me. The fact that a bullish tone was taken with the mere language that the option is open goes one step further. I am highly skeptical of the bullish advance; and we can see that many of the FX pairs that we would play this notion have been exhausted (especially when we are talking about dollar-based pairs) so that not even specuative-based extension look appealing. That being said there are a few places that are we can find a cheap entry on a bullish bias - mainly the yen crosses. I am still long USDJPY for the long haul and waiting for it to develop through sentiment channels, risk trends or yield expectations. Aside from that, short-term potential is still a little ways off for EURJPY, GBPJPY, CHFJPY, CADJPY and NZDJPY. I'll keep my eyes on them; but won't go to any great lengths to chase any trades there.

Elsewhere, I find my only other active position was stopped out this morning. EURCAD broke through the top of its descending channel with the help of indirect but aggressive euro buying on EURUSD. At full size, the loss was higher than most of the ones I have been taken over the past weeks (though it was still not up to my full tolerance as the stop was measured). Other potentail setups have been warped with today's activity. EURUSD and AUDUSD have demolished their reversal potential. On the other hand, slow to move NZDUSD could present a more timely turn and USDCHF is once again testing 0.9950/75 for a potential reversal or break (I am contemplating taking a small speclative long here). And, oftentimes there is a chance to fade big moves that are ill-concieved; which was my intention with USDCAD. However, it reversed too quickly before I could jump in; so it is a wait and see if we want to threaten 1.0215 again.