Staying flexible in your views and convictions is a vital skill if you plan to survive in markets for a long time. At the end of the day, being right or wrong hardly matters. Being able to change your mind when you are wrong and remain convicted when you are right is really the only skill that deserves to be trained.
The market has remained persistently strong. Relatively at least… U.S. markets are slightly higher, but locally markets are slightly lower. So, no real fireworks just yet. Perhaps the momentum finally shifts down, and we see the market come off a little? Particularly in the over-hyped tech sector. Let’s look at some charts and get a better idea of why we’re thinking what we’re thinking.
Once again, we come to you with charts that are bullish in an economic landscape that is everything but. Like we’ve said many times though, our job as traders is to follow the market and take the opportunities it presents to us, not to ‘make sense of it all’. So, while we could ramble on about all the various macro headwinds like U.S. government and student debt, stressed liquidity and bank balance sheets, looming recession and so many other factors that cause worry, we will not. Instead, we will simply quote Jesse Livermore for the millionth time and say ‘a bull market climbs a wall of worry’. It’s buy time!
Where the picture for the bulls start to unravel a little is when you look at Oil and the VIX in particular, and also when you consider that the S&P 500 has not managed to clear resistance. Let’s look at some charts and we’ll show you what we mean.
Bulls start to unravel Read More
We’re going to start off this weeks post by telling our readers the same thing we’ve been telling our clients for over a year now. Be careful, trade smaller, trade less often, protect your capital. The market is wild and will likely stay wild for a while. Trust us, taking chunky losses is scary and will almost certainly lead to you losing the opportunity to make the big trades when they finally come around. Be patient and conservative. The bear is here and is not taking prisoners.
Another week of painfully low volume markets locally, and nothing but a slow sideways grind in the offshore world. This current environment continues to reinforce our bearish view. Markets are feeling a little like they are about to test some key support levels as the current short-term bullish trends have broken. Let’s look at some charts and get a feel for what to expect next week.
Short-term bullish trends have broken Read More
Markets started pulling back a little last week and we’re likely to see that momentum carry for a few more weeks. Next week is likely to be dominated by inflation and interest rates as focus on CPI and PPI reports could influence sentiment.
When good charts go bad Read More
Lat week did not go as expected. We’d thought that after the FOMC rate decision on Wednesday, that the market would come under some pressure. Instead, the market rallied its face off for two days and only showed some weakness on Friday. Granted, the Friday weakness has us feeling a little pessimistic going into next week, but it is tough to be a bear at the moment
It’s tough to be a bear Read More
Last week we saw a bit of a squeeze from most global markets while China takes a break for Lunar New Year. We expect much the same this week, although in the second half fortunes could change as U.S. data and the FOMC interest rate decision could turn the tide. So, to squeeze or not to squeeze… that is the question?
To squeeze or not to squeeze Read More
Trying to figure out if this bear market is about to end or not is proving rather difficult. There are signs that inflation has topped out and that Emerging Markets are leading disinflation. Odds are good that we will likely see a few more interest rate hikes, although not as aggressive as before, to give us the ‘higher for longer’ regime that has so clearly been communicated by central banks. On one side we think that the slowing easing inflation is a product of higher interest rates and global economies slowly grinding deeper into recession, while on the other side China is waking up and there can be no doubt that this is hugely positive for Emerging Markets and commodities prices in general. Will that reignite inflation, or will that merely push Emerging Markets to outperform Developed Markets as they capitalise on China waking up? Time will tell if this is truly the turning point or not, but odds are good that we are in for a strong short-squeezy kind of week.
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