Can I get off now?
Hold tight.
Shh you.
It feels like the market is now in extreme rollercoaster mode.
Check out the ASX Emerging Companies Index [XEC]:
Source: Tradingview
[Click to open in a new window]
Madness – what an absolute tear!
An almighty rip through to October of last year, a freak out throughout November.
A big rip through to February of this year.
Then a maddening zig-zag pattern punctuated by the Iran War and a gnarly Aussie federal budget.
And wait the war still isn’t over?
Or is it?
Or is not?
Who the b***** h*** knows at this stage, seriously.
And just when we all thought the sky was falling and our beloved small miners in Australia couldn’t catch a break after the budget…
When even the best projects felt like they were going sideways despite good operational news…
This infuriating pop to the upside just had to happen!
Then again, the chart above is telling us that things could be well and truly on now that we’ve had a washout.
Maybe it’s the chart’s whispers that are right this time?
August is a seasonally semi-strong month in Australia.
Right after the washout from tax loss selling ends.
The budget made it even harder to judge — is this the latent buying I was talking about a couple of months ago?
But also remember September and October generally underperform:
Source: Livewire
This market is now a curveball machine
I’m hesitant to put out trades across my small-cap and micro-cap services in this environment — and by a trade — I mean really short-dated positions with a catalyst on the horizon in the next two months.
That’s because I’ve seen enough of the zig-zag market rollercoaster over the last six months to feel skittish.
The sky could indeed fall.
Bond yields are freaking people out, and the US Treasury Secretary had to do a rush job to support the Japanese Yen.
So goes fixed income, so goes well…everything.
But the small stocks in Australia finally have life, so I’m taking the opportunity to position readers in things with long-term potential.
Take a bit off the top along the way, de-risk and then hunker down for a longer period in the more defensive (but still very speculative parts of the market).
That means precious metals juniors, and that means developers with most of their capex financing work almost done.
When it rains it pours
Many commentators are saying it’s an absolute nightmare market to deal with because the short-term fear is menacingly powerful just about everywhere.
And yet…the downtrend snap on the XEC means a few calculated risks can’t be out of the question.
Make hay while the sun shines.
Speaking of the weather…
We’re even thinking about how El Niño will affect the market in the next 12 months.
That’s our job, and it’s a mad caper.
It’s incredibly fun.
And yet also physically strenuous, just like a rollercoaster.
Our aim is to try to make it as profitable as possible for you, too.
Tomorrow I’ll have some more thoughts on how to position yourself amidst the market rollercoaster.
For now…
I don’t know what else to say at this stage, but just enjoy it while it lasts and de-risk as soon as your palms get sweaty.
Just like this physiologically attuned trader:
Source: X
Warm regards,
Lachlann Tierney,
Australian Small-Cap Investigator and Fat Tail Microcaps
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