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There Is An Entry Point On This Major World “Safety Trade” Currency – Mike Swanson (02/19/2021)

Yesterday the DOW fell a little over 100 points after Wal-Mart (NYSE: WMT) reported earnings that disappointed. If you thought they were making a killing, thanks to all the customers being forced to go to them instead places shutdown, well it turns out that things aren’t so great there as the company reported a loss and downgraded their sales growth estimates. Meanwhile, shares of Facebook (NASDAQ: FB) also fell in reaction to the company banning all Australian users from reading or sharing news on their platform. They also have made it so that people outside of Australia, such as Americans and Canadians, cannot share news stories published by Australian news outlets. Facebook is engaging in a campaign of intimidation to demonstrate to the people of Australia that they are more powerful than they or their government. Here is what is provoking their actions.

I think it’s best to describe yesterday’s action as dull. The market is just getting tired after having rallied so much since the start of November. It can’t go up every day so here it is starting to sag. It’s something gold has been doing now for months. Big gains to the upside in a fast amount of time generate volatility that then leads to a period of sideways action until volatility suddenly returns.

If you are looking for a new trade and are interested in foreign currencies then consider the Japanese Yen, which tends to act as a “safety trade” that rises in times of financial market volatility. I have a position in the FXY YEN ETF. As you can see from the chart, the RSI is close to 30 to signal an oversold condition so I see this as a good entry point. Of course some people like to play these type of trades in the FOREX or futures market.

I did watch some of the Gamestop Congressional hearings yesterday, being thankful that my power didn’t go out, but not wanting to leave the house and drive anywhere, because of the ice on the road. Those that watched, as I did, found out that the Melvin Capital hedge fund actually had gotten out of their short positions BEFORE the giant short squeeze made the news and BEFORE talking heads like Tucker Carlson and politicians like AOC claimed that Robinhood was helping Melvin by limiting trading in Gamestop. Well, anyone who watched the hearings found out that the narrative so many were pushing the other week, of Robinhood acting on behalf of hedge funds, turned out to be a total myth – or lie – you can choose how you want to take it. They acted to limit their own exposure to the madness. Despite that after an hour of testimony some lady Congressman began to rant repeating this narrative on her zoom camera. Maybe if she had been at the hearings in person should would have listened to what I heard or maybe not. At that point I realized it was all going to be a waste of time and turned off the show. There are going to be no serious reforms out of this and what is needed the most – a jam up jump in margin rates to stop the mad borrowing people are doing to buy more stocks won’t happen.

I did catch, though, the “Roaring Kitty” character give his testimony. He basically used his time to recommend buying Gamestop and the stock actually went up as he talked.

People who were watching Youtube video had this to say about “Roaring Kitty”:

“This man said “I like the stock” ROARING KITTY HAS SPOKEN! dude is a legend”

“This guy represents the free market”

“….about a million % more eloquent than the senator who was banging on trying to ask the Robinhood CEO why he didn’t act like a regulator..”

“This investigation should not happen. He’s just an individual investor. Everyone has the right to express opinions in social media.”

Well, as far as that latter comment no one is free to share any news stories right now on Facebook that originate from Australia. It’s a forbidden act.

As far as Gamestop stock, by the end of the day it dumped.

As for politicians, people attack them and give them a hard time. But maybe they have a hard life, because they probably have few friends as people always seem to rat them out to the press. Now Ted Cruz is being told on.

I’m not looking for any important moves or news to happen today (expecting another dull market session), hence the bit of random nature of my thoughts today. In case you missed it I did a live trading session with David Skarica of www.addictedtoprofits.net on Tuesday.

I started something new this week and that is I am opening up my daily morning posts at the bottom for comments. My goal is to make this a water cooler type spot where we can talk about the markets together and share ideas. Check it out. If you got any questions or comments just scroll on down to the bottom of this post. It’s fun. If you are reading this on a mobile phone it might just be a little box that says leave a comment that you need to click to access the comments (I’m trying a wordpress plugin that loads faster on mobile).

-Mike

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