KRUGER INSIGHTS THURSDAY, FEBRUARY 20, 2014

By: Joel Kruger

A Quick Profit - Although the situation got a little hairy on Wednesday, ultimately, things played out quite nicely. I had highlighted some rumblings in the emerging markets early on, and was looking for this to spillover. I took a short S&P position in anticipation and managed to catch a nice move from 1838 down to 1822. I still think there is a good amount of risk to be priced into the downside, but at the same time, I am already positioned short risk via the New Zealand Dollar (see below), and am happy to take the profits with the equity short. I don't think the troubles in the emerging markets will go away any time soon, and as these markets are forced to contend with the ugly mix of slowing economies and rising inflation, the situation could easily deteriorate further.

Back To The More Familiar - But now for Thursday, my focus is going to shift back to the major currency markets. I think it will be worth paying attention to USD/JPY and EUR/CHF. USD/JPY has been consolidating between 100.75 and 102.75, and if the consolidation is bearish, which I think it is, this would open the door for a fresh downside extension that would project a measured move objective at 98.75. Once we get down into the 98-100 area, I will then start to look for a resumption of the broader uptrend and a fresh buy opportunity. Until then, just sit back and wait. EUR/CHF is the other interesting market worth a look. We recently dropped back under 1.2200, and a break below 1.2165 could open the door for a retest of the very well publicized 1.2000 SNB defense barrier.