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EUR/JPY & USD/CAD H1 Update
Thanks,
Seb
الاثنين، 8 يوليو 2013
الجمعة، 5 يوليو 2013
الخميس، 4 يوليو 2013
Gold is a pure Epsilon/Narrative asset
I came across this gem of a blog from a reader sending me Mauldin Economics' latest.
I think I could argue the case that gold is almost all Epsilon and little Alpha or Beta, because it is a Monetary asset, because of its massive stocks to flow ratio. As I said here "It is actually supply - the withholding of supply - that matters most." What those holders think matters, and that "think" is what the blogger calls a Narrative.
What we see going on in the goldbug internet is an attempt to construct a Narrative around gold. However, as the blogger says, it is not necessary for the Narrative to be true, "it is only important for a Narrative to sound truthful." Truth is not relevant because the point of the Narrative is to serve the interests of the powerful/those who are communicating it. How true - truth doesn't matter as long as it generates clicks and sells newsletters and coins.
It seems my, at times, crusade for truth in the blogosphere is in vain because what matters is "the more Common Knowledge in play at any given time, the more that market behaviors will be driven by the rules and logic of the Common Knowledge Game than by fundamentals or traditional factors."
Certainly I would have to concede that the current goldbug Narrative (a group of various memes) is all pervading in the gold blogosphere and I'm not really making a dent. There is a catch however. What the goldbugs don't realise is that their Narrative is not the Narrative that the rest of the world is using. Indeed in this post the blogger says that gold doesn't have a Narrative:
"In some periods of history gold is money. In other periods of history gold is not. But gold is always something, and that something is defined by the Common Knowledge of the day. To be an efficient gold investor in any period, I believe it’s crucial to identify and measure the relevant Narrative that is driving the Common Knowledge regarding gold. Only then can one construct an informational surface that predicts how the equilibrium price of gold will respond to new information ... There is no stand-alone Narrative regarding gold today, as there was in 1895. Today gold is understood from a Common Knowledge perspective only as a shadow or reflection of a powerful stand-alone Narrative regarding central banks, particularly the Fed … what I will call the Narrative of Central Banker Omnipotence. Like all effective Narratives it’s simple: central bank policy WILL determine market outcomes."
The result is that those who operate under the blogosphere Narrative will make the wrong decisions:
"You may privately believe that J.P. Morgan is still right, that gold has meaning as a store of value. But if you participate in the market on the basis of that belief, then you will buy and sell gold in an incredibly inefficient manner. You would be a smart gold investor in 1895, but a poor gold investor today."
This is a challenging statement for goldbugs - it doesn't matter if you think gold is a store of value, or if it should be one, what matters is what most people think gold is. I first came across this idea when reading The Social Construction of Reality (see this blog post of mine for background on this idea). When making investment decision what matters is what is, not what ought to be. I think most blogosphere Narratives are about the Ought, not the Is. That's fine, just don't buy and sell on that basis.
I think I could argue the case that gold is almost all Epsilon and little Alpha or Beta, because it is a Monetary asset, because of its massive stocks to flow ratio. As I said here "It is actually supply - the withholding of supply - that matters most." What those holders think matters, and that "think" is what the blogger calls a Narrative.
What we see going on in the goldbug internet is an attempt to construct a Narrative around gold. However, as the blogger says, it is not necessary for the Narrative to be true, "it is only important for a Narrative to sound truthful." Truth is not relevant because the point of the Narrative is to serve the interests of the powerful/those who are communicating it. How true - truth doesn't matter as long as it generates clicks and sells newsletters and coins.
It seems my, at times, crusade for truth in the blogosphere is in vain because what matters is "the more Common Knowledge in play at any given time, the more that market behaviors will be driven by the rules and logic of the Common Knowledge Game than by fundamentals or traditional factors."
Certainly I would have to concede that the current goldbug Narrative (a group of various memes) is all pervading in the gold blogosphere and I'm not really making a dent. There is a catch however. What the goldbugs don't realise is that their Narrative is not the Narrative that the rest of the world is using. Indeed in this post the blogger says that gold doesn't have a Narrative:
"In some periods of history gold is money. In other periods of history gold is not. But gold is always something, and that something is defined by the Common Knowledge of the day. To be an efficient gold investor in any period, I believe it’s crucial to identify and measure the relevant Narrative that is driving the Common Knowledge regarding gold. Only then can one construct an informational surface that predicts how the equilibrium price of gold will respond to new information ... There is no stand-alone Narrative regarding gold today, as there was in 1895. Today gold is understood from a Common Knowledge perspective only as a shadow or reflection of a powerful stand-alone Narrative regarding central banks, particularly the Fed … what I will call the Narrative of Central Banker Omnipotence. Like all effective Narratives it’s simple: central bank policy WILL determine market outcomes."
The result is that those who operate under the blogosphere Narrative will make the wrong decisions:
"You may privately believe that J.P. Morgan is still right, that gold has meaning as a store of value. But if you participate in the market on the basis of that belief, then you will buy and sell gold in an incredibly inefficient manner. You would be a smart gold investor in 1895, but a poor gold investor today."
This is a challenging statement for goldbugs - it doesn't matter if you think gold is a store of value, or if it should be one, what matters is what most people think gold is. I first came across this idea when reading The Social Construction of Reality (see this blog post of mine for background on this idea). When making investment decision what matters is what is, not what ought to be. I think most blogosphere Narratives are about the Ought, not the Is. That's fine, just don't buy and sell on that basis.
الأربعاء، 3 يوليو 2013
EUR/USD M10, M30, H1 & H4 Update
This is new feed for Volume Spread Analysys that have come from Infinity Futures Ltd and I hope it is a rather very good data provider.
General Outlook:
Anyway, there are two main scenatios for EURUSD now, and the difference is in placement of possible ent of wave (2) that is either finished OR latest leg down is a wave (b) of (a)(b)(c) Irregular Flat:
SCENARIO 1: Main on H4 TF - Impulsive bearish wave progression continues wirh wave (1) and (2) done already and the price is in the first staged of making wave (3)
SCENARIO 2: Alternate H1 TF - Wave (2) has not been finished yet and recent leg down is abc of wave (b) of larger cycle Irregular Flat Wave (2) correction. To confirm this outlook , price must go above 1.3000 level and then break the Weekly Pivot level as well.
Support/Resistance:
1.2984 - Swing Low
1.3041 - Weekly Pivot
1.3087 - 23%Fbo
1.3097 - WR1
1.3101 -1.3111 - 38%Fibo/Agressive Sell Area /Previous wave Four Area/WR1
1.3206 - WR2
1.3251 - 1.3265 - WR3/Key Resistance Area/ Clessic Sell Area
Trading Recommendation:
Buying is preffered only if channel is broken and previous wave 4 area with round nuber 1.3000 is broken and tested as well. Otherwise go with the flow and sell this area.
Seb
General Outlook:
Anyway, there are two main scenatios for EURUSD now, and the difference is in placement of possible ent of wave (2) that is either finished OR latest leg down is a wave (b) of (a)(b)(c) Irregular Flat:
SCENARIO 1: Main on H4 TF - Impulsive bearish wave progression continues wirh wave (1) and (2) done already and the price is in the first staged of making wave (3)
SCENARIO 2: Alternate H1 TF - Wave (2) has not been finished yet and recent leg down is abc of wave (b) of larger cycle Irregular Flat Wave (2) correction. To confirm this outlook , price must go above 1.3000 level and then break the Weekly Pivot level as well.
Support/Resistance:
1.2984 - Swing Low
1.3041 - Weekly Pivot
1.3087 - 23%Fbo
1.3097 - WR1
1.3101 -1.3111 - 38%Fibo/Agressive Sell Area /Previous wave Four Area/WR1
1.3206 - WR2
1.3251 - 1.3265 - WR3/Key Resistance Area/ Clessic Sell Area
Trading Recommendation:
Buying is preffered only if channel is broken and previous wave 4 area with round nuber 1.3000 is broken and tested as well. Otherwise go with the flow and sell this area.
Seb
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الثلاثاء، 2 يوليو 2013
الاثنين، 1 يوليو 2013
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