Trader Sees “Reckless Amount Of Confidence”, Warns ‘Watch China’

By Tyler Durden

We realize that it’s the holiday season and markets are thin, but they sure are interesting. Full of complexities. Or is it contradictions? As Bloomberg’s Richard Breslow notes, so many assets, economic story lines and geopolitical risks can go either way. Yet traders seem to be set on their current leaps of faith and happy to ignore the rest as next year’s problem.

Despite all the debatable points there’s a remarkable, some would argue reckless, amount of confidence being espoused. People are sure that things are setting up quite clearly for us to be about to enter the year of the [fill in the blank]. How we close this year will have a lot of influence on market psychology as positions are rebuilt and P/Ls started anew come January.

One favorite, no surprise, is the dollar is the place to be. Rates, safe haven, fiscal stimulus. USD/JPY is motoring and EUR/USD will have to test lower. Yet the minds of traders work in mysterious ways.

Monday we made a multi-month high in USD/JPY and then had a sloppy close. Failure came the screams. Mostly from people who don’t have the trade. A month of fundamental analysis went out the window. Until the pair …read more

Source:: ZeroHedge