Well, this is darned interesting
In this graph we have an interesting thing. It looks like our “Whale” has sold back out of the gold they bought, and is now moving partly into Yen and partly into Euros (or closed out a Euro short position).
We have Yen and Euro up, Gold down, and stocks flattening. Hmmm….
This all, of course, assumes that there really is a Whale driving this market right now and these are not just disconnected events… But that tendency of the Yen to slowly rise over time sure looks like someone steadily shorting the SPY down and rolling the cash from those short sales into Yen, driving it up proportionately.
OK, on the “sell side” we had a 3 day lag to buy the gold as the trades needed to settle. But sell gold, and I think you get “cash today”. Which would imply “use it tomorrow”.
By the time folks see this it likely will be tomorrow, so hear is a live version of the same chart:
Now if this theory is correct, we ought to see a closing out of the short positions in US stocks tomorrow and an attendant rally. In that case, the “trade” would have been to sell out of gold yesterday (not sure how to have predicted that day… perhaps that jump up at the end of the day is the counter direction “head fake” to get the market price up just before the dump? Then if true, one ought to prepare to short the Yen and buy stocks.
If that thesis is correct, we ought to see the Yen dropping (as the Yen in the account(s) are used to buy back the stock short positions. And stocks recovering along the way too. If they have taken off a Euro short position, we might well see the FXE rise as well.
It’s also possible part of the short positions might have been closed today. I found this chart rather interesting:
Notice the huge volume spike as these are most likely shorted to death. Then the “up volume” at the end on rising price. Sure looks to me like a bit of a short cover (though perhaps with more to go). I’d expect a small ‘dead cat bounce’ tomorrow. We’ll see…
This is for Visa and Master Card. AXP American Express, COF Capital One Financial and DFS Discover Financial Services all look about the same, though with a bit less volatility in some and many of them looking better than V and MA on total price movement.
So watch for a quick rally tomorrow on a short cover. ( If this “Whale Watching” thesis has anything to it…)
What are some other currencies doing?
Just for Grins, here is a chart of the British Pound v.s. several other currencies. I notice that the Australian Dollar got knocked down hard today. The Pound has MACD turning up and with DMI near a crossover. Also notice that pattern in the RSI of a ‘higher low’. All in all it looks like the pound may be headed up a little bit. About 10 days back to the SMA stack, if the 6 month daily interval version of the chart is to be believed. Then it ought to resume the gradual trend down. (The assumption is that “A trend in motion tends to remain in motion for a long time”.)