We have to admit that today’s post was difficult to write. It is hard to focus on opportunities in the week ahead while our country appears to be… well, having a really rough time. We often say that we must filter out the noise and focus only on those things that can accurately analyse (aka. the chart), so that is exactly what we are going to do. Besides, the world’s financial markets are looking fairly good and we’ve positioned well for strength in the offshore portfolio’s. The only thing to do now really is to be patient and hold our positions.
The second half of last week got really wild, really fast. Given the fact that hardly anything has changed – in the sense that there are no interest rate hikes on the table for at least another year and a half, and that the FED will continue to buy $120bn worth of bonds every month – we think that the market might have had a bit of a strong ‘knee-jerk’ reaction to the FOMC minutes. Thus, we say buy the dip. As long as the free money keeps flowing, it will be difficult for the market to sustain downside.
Sometimes we just need to be patient and follow the trend. We often get so caught up in the short-term news flow and happenings of the market that we lose focus of the bigger picture. Right now markets are trending higher, so our job is simply to look for opportunities to get on the bus.
It’s an age old saying in the market, and for good reason. The trend is your friend. Often we try to fight it and mostly, it wins the day. Markets are currently trending higher, and thus our plan is to find opportunities to get onboard with the trend and allow it to make the returns for us.
Once again we’re doing things a little differently this week, just because we can really. So instead of giving some broader market trade ideas as we usually do, we’d thought that we would do a CFD account update and share the current open CFD trades in our managed CFD accounts.
Our view has been that one should treat cryptocurrencies much like you would treat any normal individual stock in your portfolio. With the recent rout in cryptocurrencies, we think that it’s time to buy bitcoin. There are many loud voices out there right now (let’s call them paper hands) that are ranting on about how bitcoin is dead… ignore them. Treat it like a normal stock, don’t take massive (or geared) exposure and don’t bother about the opinions of the paper hands. It’s time to buy bitcoin.
Well then, that’ll teach us to think that markets can actually come down from time time! Jokes aside, the bearish setups from last week have all be nullified and a fresh set of breakouts have taken place. Guess when it comes to equity market rallies, you really can’t stop a good thing. We’re not entirely convinced from a long-term perspective, but for the short-term traders… well, the job is to follow the market. So if you can’t stop a good thing, you might as well join in the fun.
The age old adage of “Sell in May and go away”… Well, it’s May. What now?
Ironically, the bullish breakouts that took place last week, for the most part, seem to be failing. Perhaps “Sell in May and go away” is rooted in more than just seasonality and superstition? Either way, charts are looking a lot less bullish than they did over the last three or so weeks.
Very often we overcomplicate things for ourselves. The easy truth is that trend following it often the best way to interact with markets. Since the trend is currently very firmly up, we’re happy to toe the trend following line for as long as the trend stays in tact.
We’ve said a few time in the past that patience is key. The main benefit of being patient when it comes to trading is that we can wait for the really good setups to mature and then take trades in which the odds are firmly skewed in our favour. Some of the stocks we’ve been watching for a long time have finally triggered buy signals.