markets) seem to be very attractive ‘underperformers’ that seemingly offer a huge amount of value. Generally the thinking is that we are entering into a new global growth phase and that the underperforming emerging markets ‘should’ catch up to developed markets. That is an enticing narrative and one probably worth positioning for. However, there are some warning signs that are not going away and are difficult to ignore.
We are all guilty of overcomplicating trading. Often we have to remind ourselves that most of the work is done by the market and that trend following is often the easiest way to interact with markets. This week we look at a few of the better trend following ideas we have for the week ahead.
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.
Well then, alright. This week we’re doing things a little differently. @TraderPetri asked twitter what they wanted us to have a look at and we’ve obliged. In no particular order, here are the twitter chart requests for the week ahead.
Well, after all that bearishness, all we got was one day of #marketcrash trending on twitter and a bounce so glorious I’m sure people will be singing songs about it at some point in the future. It seems that ‘buy the dip’ is not dead just yet. In truth, the irrationality of this whole market is starting to scare me a little, although I am not going to fight the ‘buy the dip’ crowd.
As equity valuations reach closer and closer to the stratosphere, trading Gold has become a little more tricky than what it was when all the stimulus was just announced. In fact, Gold has been fading ever since August last year. Now, after all is said and done, we’re finally starting to see Bond Yields start to rise and the Dollar start to strengthen. These two forces might be enough to catch some the bulls trading Gold offside. Things are looking fairly bleak for the shiny yellow metal.
Well, technically the Santa rally is only really the period between Christmas and New Years, although traders have been ‘front running’ this seasonality a little over the last few years. Furthermore, from what we’ve seen on the newswires over the weekend, it seems that another round US Fed stimulus is almost certainly going to be finalised before US markets open on Monday. Nothing like a freshly minted $900 billion to get markets into the festive mood.
There are still a few weeks to go before Christmas, but hopes of a Santa Rally are starting to take root. For now, most of our watch-list still appears bullish, although there are some warning signs. We could be seeing some early signs of fading momentum on the major indices, although it might still be too soon to tell.
It seems that there are a ton of people out there trading the oil price in some way or another. Most people of course have either been getting involved with Sasol or have been thinking about it. We’ve received a ton of requests from all over, from people asking about the oil price and particularly about Sasol.