Chat with Joe Ross
Chat log from: Tuesday, September 18, 2007
Live Chat with Joe starts Tuesday at 8.00 PM U.S. Central Time! |
IN THIS TUESDAY'S CHAT YOU ARE GOING TO FIND SOME COMMENTS REGARDING THE FED'S 50 BASIS POINT RATE CUT. THERE WERE SO MANY QUESTIONS ABOUT IT THAT DURING THE NIGHT I DID A BIT OF RESEARCH, ESPECIALLY WITH REGARD TO THE CIRCUMSTANCES SURROUNDING THE WAY CURRENCIES REACTED IN JANUARY OF 2001 WHEN THE FED MADE A SERIES OF 50 BASIS POINT RATE CUTS. AT THAT TIME, INSTEAD OF THE DOLLAR TANKING, IT ACTUALLY RALLIED 11% AND SO IN THE CHAT I ISSUED A HEADS-UP JUS IN CASE A SIMILAR REACTION TAKES PLACE OVER THE NEXT DAYS, WEEKS, AND MONTHS. HOWEVER, AFTER MY RESEARCH I DISCOVERED SOME GLARING DIFFERENCES BETWEEN THEN AND NOW.
IT IS DIFFICULT TO FULLY COMMENT ON ANYTHING DURING THE CHAT, BUT HERE ARE SOME ADDITIONAL THOUGHTS VIS-A-VIS THE RATE CUT.
WHAT IS AMOUNTS TO IS THAT THE FED PANICKED AND DECIDED TO CAVE IN TO THE MARKETS INSTEAD OF BITING THE BULLET AND DOING WHAT WAS GOOD FOR THE ECONOMY AND INFLATION. THE FED'S CHARTER READS THAT THEY ARE SUPPOSED TO MAINTAIN THE VALUE OF THE DOLLAR. THEY HAVE FAILED MISERABLY IN DOING THAT, AND THE RATE CUT WILL ONLY MAKE IT WORSE. THE RATE CUT IS HIGHLY INFLATIONARY AND ACCOMPLISHES JUST THE OPPOSITE OF WHAT THE FED CHARTER CALLS FOR--STABILITY OF THE DOLLAR. ONE LAST POINT AND THAT IS THE TIC DATA, WHICH I MISTAKENLY CALLED PIC DATA. I CORRECTED IT IN THE CHAT BELOW. TIC'S DATA SHOWS HOW MUCH OF U.S. DEBT IS BEING BOUGHT BY FOREIGN NATIONS. AT CURRENT LEVELS OF DEBT, THE U.S. NEEDS TO SELL $75 BILLION PER MONTH. IN MAY AND JUNE THERE WAS A SHORTFALL IN THE AMOUNT NEEDED. YESTERDAY THE DATA FOR JULY WAS ABOUT WHAT WAS NEEDED BUT IT CAMME IN MIXED. MOST OF THE $75 BILLION WAS IN SHORT TERM INSTRUMENTS AS OPPOSED TO LONG TERM INSTRUMENTS LIKE T-BONDS AND T-NOTES. THIS SHOWS A LACK OF FAITH IN LENDING LONG TERM TO THE U.S. TIC STANDS FOR TREASURY INTERNATIONAL CAPITAL IT IS A REPORTING SYSTEM AND IT SHOWS A BUNCH OF STATISTICS BROKEN DOWN IN CATEGORIES: SECURITIES DATA. BANKING DATA. DERIVATIVES CONTRACTS, NON-BANKING DATA, AND QUARTERLY DATA ON U.S. GROSS EXTERNAL DEBT. ENJOY THE REST OF THE CHAT. |
|
| traderstuff joined. | |
| tony joined. | |
| JoeRoss joined. | |
| tony | Joe: Before I join the gang. I want you to know that I've been banned off a forum for acknowledging your methodology. |
| JoeRoss | Sounds like Profitunity :) |
| CapnBill joined. | |
| tony | Actually, on this forum they've been palming off your 1-2-3 Swing as Fractal Geometry trading. I took exception to it and I was then banned. |
| shamutooth joined. | |
| JoeRoss | I don't think they've ever had anything of their own that worked. |
| Mini_Mike joined. | |
| sherri joined. | |
| beagy joined. | |
| shamutooth | Hi Joe, all. |
| beagy | Hello. |
| JoeRoss | Hi everyone. |
| sherri | Hello! |
| CapnBill | HI, Joe, everyone. |
| beagy | Great to finally be able to get to this room. |
| JoeRoss | You are welcome here. |
| sherri | Joe, anything you'd have to say on the Fed move today would be most interesting. |
| beagy |
Thank you I have been watching your postings for some time; very professional and inspiring I would like to take this opportunity to thank you. |
| spreadtrader joined. | |
| JoeRoss |
I don't have much to say about it, sherri. I thought it would be .25 or .50. I was not at all surprised. However, a word of caution. If you look at what happened in 2001, when we were pretty much in the same situation as we are now, the dollar actually rallied 11% all the way from January 3 into June. |
| JoeRoss | At that time we were looking at the dot com collapse. This time we are looking at the real estate collapse. In 2001 we were on the edges of a recession. Same thing now. |
| JoeRoss | Thank you, beagy. |
| beagy | You are welcome it is true. |
| George joined. | |
| JoeRoss | So a word to the wise, watch the currencies very carefully for the next month or so. We may be in for a surprise. |
| sherri | So now the economy is helped at the cost of the dollar (sooner or later) and the bond...? |
| tony | Right at this moment the Eur/Dls is 1.3980 |
| George | You mean besides the poor dollar being left for dead? |
| JoeRoss | sherri: Maybe helped only in the short-term. |
| shamutooth | Joe, didn't the fact that we were going to war help strengthen the dollar? It's a very different geopolitical situation today. |
| zendre joined. | |
| JoeRoss | Did anyone happen to notice the TIC figures? I didn't get a chance to look at them. |
| zendre | Hi everyone. |
| soft joined. | |
| JoeRoss |
All I'm saying is that in 2001 under similar circumstances, when everyone thought the dollar would collapse, instead it rallied for 6 months. A lot of people had already discounted the interest rate cut in 2001. We seem to have a similar situation today. Now they may start buying dollars again as they did in 2001. |
| Mini_Mike | Good Evening all! |
| JoeRoss | shamu: We were not going to war in January of 2001. |
| Mini_Mike | Good Evening |
| George | Hope so! My parents just got back from Greece. My father brought $10,000 USD and got back 6,500 euro. |
| JoeRoss | I am not making a prediction about the dollar. I'm just saying be careful. |
| sherri | What happened to the bond in 2001. ( I know - trade what you see). |
| shamutooth | Joe, absolutely correct - It wasn't until later that year. |
| Mini_Mike | Joe, do you have time for a question about the trading methods? |
| JoeRoss | The charts don't lie. Bring up a chart of the dollar Index and take a look for yourself -- January-June 2001. |
| JoeRoss | sherri. I don't know, I haven't looked. |
| soft | Joe: How can a US citizen trade CFD legally? |
| JoeRoss | Mini_MIke: Methods questions should be asked on the forum for the method. |
| JoeRoss | soft: Open an account with a foreign broker. It is perfectly legal to have a foreign trading account. |
| Mini_Mike | OK Thanks |
| Mini_Mike | Joe: Regarding the Performance report and equity curve (without commission): information published with the Trading Methods, What time frame does the report cover? |
| JoeRoss | Mike: The time frame is right there on the chart on the website. It covers 2.5 to 3 years. |
| soft | Joe: which foreign broker? I checked with several ones, they all denied. |
| Mini_Mike | Thanks. |
| JoeRoss | soft: I don't have a CFD broker yet. I am waiting until 2008 when I will try to find on in Australia to trade them there on a regulated exchange. |
| JoeRoss | Mike: You most likely will have to open the account in a foreign currency. |
| beagy | CFD? |
| tony |
Joe: According to my charts....the Euro/Dls went into congestion in 2001 and then around March 2002 the dollars started to lose ground and right now it's near its 1.4000. Something is about to happen. |
| JoeRoss | beagy: Contract for Difference = CFD. |
| acman joined. | |
| beagy | Oh! Thanks. |
| soft | Joe: have you traded single stock futures? |
| JoeRoss |
soft: Only a couple of times. The liquidity is almost non-existent, and so I don't trust it. However, the fills I got were decent because they are being supported by market makers. |
| soft | Hope they will improve. |
| JoeRoss |
sherri: Bonds initially went down in all of January, 2001. In Feb. they went sideway and then in Mar. they went up again. Basically a huge trading range, until late Mar. Then they went down all the way to June. |
| shamutooth | Just checked. The rate cut on Jan 3, 2001 was also a 50 basis point cut. Going to be interesting to see what the dollar does. |
| JoeRoss | The pattern looks very familiar with what happened back then. |
| acman | I was surprised that the currencies didn't jump. It seems the markets had the rate cut already in. |
| JoeRoss | acman: That's right, at least .25 of it was already discounted in. Some had discounted the entire .50. |
| JoeRoss | The C$ jumped and finished almost on its high. |
| soft | Joe: Is open interest analysis still useful in view of the presence of commodity fund? |
| shamutooth | Also interesting that less than 30 days after the 50 basis point reduction in 2001, they cut 50 points again. |
| JoeRoss | soft: I have not found OI to be of much help. |
| JoeRoss | shamu: And they may repeat the same thing. But the dollar index climbed steadily from Jan. on in 2001. |
| zendre | Joe, I am planning to buy your Easy Bond method. Is this method active this period, or does it have a "resting" ,"non-trading" phase? |
| JoeRoss | Everyone thought that the huge rate cuts would destroy the dollar. But it didn't. |
| JoeRoss | zendre: It is very active and booming. |
| shamutooth | It just seems hard to believe they cut 50 points with gold, oil and other commodities at highs. |
| acman | I read today that China raised their interest rate. I think it was on Yahoo news through MarketWatch. |
| JoeRoss | It will be interesting to see the TIC numbers. How much of our debt was purchased. I think they came out today. But haven't had time to check. |
| zendre | Was U.S. debt on similar level in 2001? Was the worldwide inflation rising at that time as well? |
| JoeRoss | May and June TIC numbers were down. Today was supposed to be July TIC numbers. In other words foreigners have been buying less U.S. debt. We need to sell $75 billion/month just to stay even. |
| sherri | What is TIC, please? |
| JoeRoss | zendre: I don't remember. That would be a good homework assignment. |
| zendre | How was the European economy that time? |
| JoeRoss | sherri: The TIC numbers tell how much of our debt is being bought by other countries. I don't know exactly what TIC stands for. |
| JoeRoss | zendre: I don't know the answer. |
| sherri | Thanks. Is it something we should watch? |
| JoeRoss | I am not an encyclopedia |
| JoeRoss | sherri: I don't know about "we," but I watch it. |
| JoeRoss | If we can't sell our debt, then we have a problem and the FED has only a few choices: One of them is to raise interest rates. |
| JoeRoss | Another would be to strengthen the dollar. A third would be to go to a dual currency. |
| zendre | The questions are for everyone :) Do not expect answers from Joe alone. |
| sherri | So, it would be like other reports - CPI, PPI, etc ? I don't think it's on the list of reports that influence the market, is it? |
| JoeRoss | Or a 4th would be to push for the AMERO! |
| soft | Dual currency? |
| JoeRoss | sherri: You have to look for it. Try to google for TIC. |
| soft | Joe: what assets go up in high inflationary condition? |
| sherri | Okay. Thank you. |
| JoeRoss |
soft: Yes dual currency like they did in South Africa. A domestic dollar, and an international dollar. A redback and a greenback. You would have to turn in all your dollars and receive redbacks worth some fraction of the dollars you turn in. |
| JoeRoss | soft: Commodities of all sorts. Foods, grains, metals. |
| JoeRoss | Also, anything imported. |
| soft | Joe: thanks, also what is Amero? |
| JoeRoss | soft: The proposed single currency that would be issued to citizens of the U.S., Canada, and Mexico. |
| sherri |
This is a really simple-minded question, but it is sincere, so here goes: when I'm looking at a TTE, and there isn't enough room to the "point" to make it worth the trade, BUT THEN the second trigger bar creates more room, enough to make profitable, is that a good bet? |
| JoeRoss | Amero would be like the euro, a multi-national currency. |
| JoeRoss | sherri: All trades are a bet. If it works it was a good one. If it doesn't it was a bad one. |
| soft | Amero is probably decades away. |
| JoeRoss | Sherr: Some people prefer the second and third bars of correction and trade only those. |
| JoeRoss | soft: If you would see the highway they are already building through Texas you would not say decades away. |
| JoeRoss | It has 6 lanes in either direction. |
| soft | Yes, I saw that in Houston last week. |
| sherri | Thanks! |
| JoeRoss | It is as wide as 3 football fields in width not length.. |
| zendre | Jesus! |
| JoeRoss | Capn: Could be, I never bothered to look. |
| acman | I watched a train a few days ago from Mexico carrying cars through Austin going north. I waited almost 10 minutes. |
| soft | Joe, so there is a realistic chance for Amero? |
| JoeRoss | That highway they are building without our approval will go all the way to Canada, and Congress acts like it isn't even happening. |
| JoeRoss | soft: Bush would like to have it before he leaves office. |
| sherri | Holy Schmoly! What's it for? |
| acman | The cars on that train were Canadian. I guess they were traveling from Mexico to Canada where they have real dollars. |
| zendre | Maybe he likes driving on motorways? |
| JoeRoss | I don't think he'll get the amero that fast, and maybe it can be defeated. There will be some huge court battles about it. |
| soft | I did not realize there is such a big thing going on. |
| JoeRoss | sherri: it is to replace your dollars with ameros. |
| netwonc joined. | |
| traderstuff | Those with the "Real Power" usually get their way eventually, and certain moves cannot be hidden. |
| JoeRoss | The highway is being built to allow completely free trade between 3 countries. |
| zendre | It sounds like the esperanto language to me. Seemed logical, but never got fields. |
| zendre | I mean the Amero. |
| JoeRoss |
traderstuff: Right not completely hidden. A friend of mine showed me photo slides of the highway, but it is being kept under wraps as much as possible. |
| zendre | However, someone said that the EURO currency was a way to finance the German debt by other countries in Europe. Maybe the US is learning from Germany? |
| JoeRoss | It's pretty hard to hide a 12 lane highway. |
| sherri | What would Ameros do FOR the government and TO us? |
| traderstuff | I suppose there are many other things going on around the world that us common folks will not be privy to until it is unstoppable, or nearly so. |
| JoeRoss |
The Germans were pretty upset about the euro and many would still like to return to the D-mark. For every 2 D-Marks they turned in they got 1 euro. But if something was priced at 10 D-Marks, it became 10 euros, which means overnight the people lost 1/2 their purchasing power. |
| acman | The dollar has dropped almost that much in the past 4 years. |
| JoeRoss | ameros would let the U.S. pay off its colossal debt with cheap ameros. For us, it would cut our purchasing power by some unknown percent. I'm guessing about half. |
| zendre | In Europe it seemed to be correct, I mean we were counting cars price by the 1/2 method. |
| shamutooth | Everyone should own some gold :). |
| JoeRoss | I have a couple of gold fillings |
| zendre | I would go for steel as a future commodity. Is there such? |
| JoeRoss | Maybe I should insure my mouth???? |
| JoeRoss | zendre: No steel futures that I know of. |
| sherri | Definitely, on a few counts! |
| soft | Joe, It seems to me that you know many new developments, may I ask where you learn all these? Which newsletters? |
| shamutooth | Speaking of gold, has anyone traded it it lately? |
| JoeRoss | soft: No particular newsletters. Newsletters are too slow. I get a lot of info from our students and traders I know from around the world. |
| zendre | So remains the GOLD, or could the platinum be as good to rescue from inflation? |
| JoeRoss | zendre: Platinum is way to high to consider as a dollar hedge. |
| JoeRoss | The best hedge right now would be silver. |
| zendre | I see. |
| zendre | Corn? |
| JoeRoss | Normally the silver gold ratio is 16 silver to 1 gold. Right now the ratio is around 50 silver to 1 gold. So Silver has a lot of potential to close that gap. |
| zendre | Corn is cheap (especially relatively to wheat). |
| sherri | Has anyone constructed a spread on that silver/gold ratio? |
| JoeRoss | Corn is for cows and pigs. The ethanol thing isn't going to happen. It cost more to make it than you get out of it. |
| zendre | The spread opportunity just unfolds. |
| JoeRoss | The C$ just took off again in the globex trading. |
| JoeRoss | .9897! |
| acman |
I have had good success buying the R2k ETF on dips. It went up 9% today. The value of companies will go up with inflation and dollar devaluation. |
| JoeRoss | We may see C$ parity in a day or two. |
| JoeRoss | I'm long C$ since yesterday. |
| acman | What time period did you use for the trade? weekly, daily? |
| JoeRoss | acman: C$? Daily bar. |
| acman | I saw that yesterday but didn't take it. Watching wheat too much. |
| JoeRoss | I got in at just about the low yesterday. |
| JoeRoss | I think the Asians must be liking the C$ a lot because that's who is in the market right now. |
| zendre | They must be looking for something valuable. |
| zendre | Something without debt. |
| shamutooth | I heard Japanese housewives are huge currency traders. |
| JoeRoss | Well the Asians are buying up everything the Canadians are willing to sell them. |
| JoeRoss | Chinese housewives too. I know at least 1 Chinese housewife currency trader. |
| acman | I was surprised the Australian Dollar hasn't done better considering its resources. |
| soft | Joe: you trade currency future or forex? |
| zendre | Something bad with the Aussies? |
| JoeRoss | acman: There are some short term problems over there. But it will rally again real soon. |
| JoeRoss | soft: Futures whenever possible. |
| soft | Joe: What short term problems with Aussie? |
| JoeRoss | zendre: Something happened over there a few days ago, but I don't remember what is was. |
| JoeRoss | There are so many things going on that I can't keep track of them all. But A$ is a buy. |
| JoeRoss | Boy that hour sure went fast. I think my fingers are ready to fly off. |
| JoeRoss | Good night everyone. |
| JoeRoss | See you next week and thanks for a lively chat. |
| shamutooth | Good Night. |
| sherri | Nite Joe and thanks again! |
| zendre | Thanks for the conversation. |
| acman | Great seeing you last week. Great presentation. Good chat tonight. |
| Mini_Mike | Thank you Joe. It is my turn for zzzzs. |
| JoeRoss | Thanks acman. |
| acman | Good luck trading everyone. Have a great week. |
| soft | Thanks Joe. |
| traderstuff | Thanks for all you do for the trading community Joe! |
| JoeRoss | It will be an exciting week. Tomorrow is CPI. |
| JoeRoss | We try to please. |
| CapnBill | Bye...thanks. |
| traderstuff | :) |
| JoeRoss | Hasta next week |
Next Chat with
Joe Ross:
Tuesday, September 25, 2007
Time: 8:00 - 9:00 P.M., U.S. Central Time.
COME BACK WITH YOUR TRADING QUESTIONS & COMMENTS!
