This morning, the S&P 500 Index e-mini futures (ES-U3) are trading lower by 6.25 points to 1687.50 per contract. Traders and investors should now start to focus on the USD/JPY chart as it seems to dictate where the major stock indexes in the U.S. are going to trade. A strong USD/JPY chart will usually indicates upside for stocks. A declining USD/JPY chart will generally indicate weakness in stocks. It’s all about a very leveraged carry trade that moves markets. Basically, the institutional money (big money) bets on a weaker Japanese Yen and buys U.S. and European stocks with the proceeds from that leveraged trade. When the short yen trade stops working the money comes out of the stock markets around the world. In essence, it’s all just one big currency trade at this time. If you do not have a chart of the USD/JPY chart you can follow a chart of the ProShares UltraShort Yen (NYSEARCA:YCS) which mimics the action in the currency pair.
The information in these Market Commentaries do not constitute a solicitation of the purchase or sale of any futures or options contracts.
