KRUGER INSIGHTS MONDAY, FEBRUARY 17, 2014

By: Joel Kruger

Taking A Step Back - Despite a recent bout of broad based USD selling, I am not seeing any real compelling reason to be selling the buck at the moment and would still be looking for strength. Overall, the Greenback's trajectory is constructive on a medium term basis, and the ongoing expectation for a move towards more normalized Fed policy (as slow as it may be), should continue to narrow yield differentials in favor of the buck. I still believe risk assets are overvalued at current levels, and expect US equities to once again roll over up here. Unfortunately, I was forced to exit this latest S&P short from 1820.9, with the market just running too far beyond what I expected. Still, we have had a good run with the S&P in 2014 and no reason to be discouraged here. Just need to stand aside for the moment. Earlier today, there was an amazing counter-trend setup to sell Cable (hope you guys caught my message with that), and I was able to take advantage and get a great entry at 1.6816. 

Waiting On The Yen - I have since exited the position for a small profit, but would not rule out the possibility for deeper setbacks, with the market tracking at multi-month range resistance. My only exposure at the moment is a Kiwi short, and I will be looking to build into this position in the sessions ahead. A break back under 0.8300 should do the trick, while any rallies beyond 0.8400 should be exceptionally well offered. USD/JPY has recovered nicely from earlier lows, but I would be looking for another topside failure here in favor of an eventual break below 100.75 and towards 100.00. There is still room for more of a correction in this major pair before the broader underlying uptrend resumes. Ideally, I would love to have the chance to pick some up between 98-100 over the coming days. I have to run off now. I am speaking at the Traders Expo in New York today. Apologies for keeping today's note a little shorter than normal.