Things are starting to get a little wild out there as we approach the U.S. elections. Most of the charts that we look at this week are or larger market indices. Volatility is likely to remain elevated for the rest of the year. We’re not quite ready to start buying the dip just yet, nor are we sure that we’ve even really seen the dip yet. A bit of a zoomed-out macro view this week.
Being overly bearish is bad for your health, so please take the this week’s game plan with a pinch of salt. Overall we are becoming more and more concerned with what we think is irrational exuberance in the market. We look at some of our concerns and identify some trading opportunities for the week ahead. We also have a look at some requested charts.
Building on some of the thoughts we shared in our blog post last week (U.S. commentary), we want to start off the weekly game plan by urging caution. We need to remain ‘trend followers’ and keep dancing while the music is playing, but we must acknowledge the possibility that the carpet can be swept out from under us at any minute. Most importantly, we need to be ready to jump when the carpet is pulled so that we don’t fall flat on our faces… but also not spend the entire party just jumping up and down in the middle of where everyone else is trying to have a good time. It is best then to keep a flexible ‘everything is temporary’ mindset, and be open and ready to change our views when presented with evidence contrary to what we might think we know.
It feels as if we are on the edge of battle. The air is still and so thick with tension that it is hard to breathe in. Nonetheless, the market goes on. In fact, it is starting to offer some interesting opportunities to those who are patient. We look at the S&P500, USDZAR, Clicks, Shoprite, Sibanye and Anglo American.