"The Yen is strengthening a lot and we are quite certain that this isnormal… but nonetheless disconcerting… end-of-month buying of the Yen by Japanese exporters. They are usually “in” at the month’s end for this purpose, and they were a bit more aggressive than usual given the Yen’s recent weakness. Fearing only a few weeks ago that they might be executing orders with a “handle” of 75, the exporters were and are ecstatic having gotten something instead with a “handle” of 77. Too, there appeared to be some added “stop loss” selling of the US dollar vs. the Yen that was touched off as the Yen/dollar rate fell to 77.25, sending it to 76.95 at one time before the dollar found support."
- Gartman Letter 27/01/12
- Gartman Letter 27/01/12
Whilst we don't always agree with Dennis G, we have been trying to find excuses to enter a JPY short for the last few months and finally we have been presented with the ideal technical entry. With strong support in the mid 76s and a fundamental picture that continues to deteriorate (worsening trade balance, debt issuance problems) the comparison to a put-option is particularly apt.
This is a high conviction trade and we intend to enter it with considerable gusto, the first of such trades this year. Our entry is between 76.9 and 76.6 and our stop is 76.25 with around 1-2% risk on the table.
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