Overall markets are feeling a little ‘in the middle of nowhere’ at this stage and thus our weekly game plan is to mostly be patient and wait for better setups. We look at some of the major U.S. indices and note that there are no really good setups to be had at this stage, although Gold, Sliver and Oil might be setting up for some decent trades. On the local front, we’re probably complaining too loudly about low volumes, but there seems to be a select few good setups.
Every week in 2020 seems to get stranger and stranger. Last week we saw the death and rebirth of stimulus talks and Trump uses his ‘art of the deal’ tactics to look good for the election. Make no mistake, the election is a big deal and it’s coming closer. Odds are that volatility will pick up a little heading into the election and thus we’re happy to take it very slowly. That said, markets are looking generally strong and confident at the moment.
We’re experimenting with something different this week. Let us know what you think!
The ‘tech call option whale’ that’s been doing a lot of this buying has now been identified as SoftBank. We also had news that Tesla will not be included in the S&P500 index. Perhaps the Nasdaq melt-up might have finally come to an end?
There does not seem to be too many good setups around at this stage, and the only relatively attractive setups are slightly longer-term in nature. That is, on a swing trading basis were trades are taken for a number of weeks, rather than just a few days or hours. A catalyst might come in the form of Trump signing an executive order to provide further coronavirus relief directly to US households.
During the last week we started seeing some signs of distress in the Nasdaq, with some heavyweights beginning to show a little bit of weakness. Our strategists put up two posts on the current outlook on the Nasdaq on the International Outlook blog, which showed some key support levels being tested and broken. With those in mind we are slightly more cautious this week.
The world is mostly mad, but luckily our views and beliefs about the world around us has little to do with what is actually happening, and the key to moving forward is to respond appropriately to the external environment, regardless of whatever it is that we might believe. Our job as traders is now and has always been to simply follow the market. Therefore we look mostly at technical analysis again this week so that we stay unbiased.
It is sometimes difficult to remain objective when it comes to market analysis. The more we look at charts, the more bearish we become. This might not be the right outlook as it could just be various forms of biases that we are unable to overcome. The primary objective of any investor or trader is to remain objective and see things for what they are, not as what we would like for them to be.
Over the weekend we saw some positive news flow around the trade war between the U.S. and China. We saw some positive comments on Thursday and Friday last week as well, which led to a rather strong recovery in global equity markets.