Hey guys,

For those of you that have been following my weekly analysis or even my trading for a while now, I don’t pay attention to news all that much, technicals are still the main driver for me. Fundamentals merely act as catalysts (to make my forecasts come true) or to stall my forecasts and reverse them. Last week was debt ceiling talks, worked in my favor. The S&P downgraded the US credit rating from AAA to AA+, which has never happened in the past. I can’t seem to find the damn source article of this (quick search + I’m lazy and strapped for time). A boat load of fluff articles have already covered up the source and just started talking about scenarios.

This is just my take on it, I’ve never studied debt analysis in regards to international finance. But, I would think it’s similar to budget deficits in a way. So, basically what I see the credit rating downgrade doing is, it de-values the US bond values. Kind of like changing interest rates. So, since the value of the bond goes down, in order for the big players holding these bonds to get their value back up is to play with the exchange rates. For example, if bond value goes down and USD goes down, then you got screwed over twice, something is now worth less based on the rating and worth even less since the exchange rates is no longer in your favor. To combat this, you try to manipulate the exchange rate high enough so that the devaluation of the bond is offset by the exchange rates to equilibrate the bond value back to it’s original value.

Not sure if it does that in reality, but that’s my take on it, I just came up with this theory like 5 minutes ago and posted it now. I’m still busy catching up on my readings for my final exam next Monday. You guys most likely won’t see me post again till Saturday morning. But on the note of my forecasts, I entered all the trades yesterday before market open and DAMN, I didn’t look carefully last week at this, but the spreads were wack yesterday when the market was closed and even after market open. Something like 15-30 pips for the spread, posted below is a picture of all the entries for this week’s forecast + the current gains on the trades at the time of posting, almost the same as last week’s close lol, and it’s only Monday. But this might be short-lived and I may get screwed over for the rest of the week, who knows?!

Side note for stocks, I may delay entering markets right now.. given the S&P downgrade, even though forex isn’t taking a hit, stocks are since that’s backed by different fundamentals. When I do start, I’ll post the new spreadsheet to show what stocks will look like.