It’s safe to say that trading conditions over the past year have been absolutely awful.
I doubt many investors out there have been making much money. It’s been a case of battening down the hatches and hoping you can get to the other side with all of your limbs intact.
My approach for the trading services I run has been to lower trading activity, set wider stop-losses, and take part profits quicker.
Like everyone else, I’m waiting for signs that the worst is over, and it’s safe to pop my head out of my shell.
The release of softer-than-expected CPI figures in the US put a rocket under bonds and equities this week, so there is a strong case to be made that this rally will have legs.
But is it the end of the bear market?
Who knows. All I can do is trust the model I have developed to understand price action, and that is saying there are still more hurdles that must be overcome before you can become 100% bullish.
But my shorter-term charts are pointing up for the moment, so I have been buying a few things here and there over the past few weeks in the hope we will be given the chance to take part profits before the selling returns.
I watched Fed Chairman Powell speak last week after the 75-basis-point rate rise, and it seemed clear he wasn’t going to be moved by one or two positive data points in indicators he doesn’t follow.
So rates will continue to ratchet higher over the next six months. The economy could keel over into a recession, which will hit earnings and, therefore, stock prices, despite the fact the Fed may be nearing the terminal rate.
But that is a story for another day. Markets have been selling off for a year, so a bit of good news could ignite a solid tradeable bounce that could last a few weeks or months.
Perhaps we will get a Santa rally after all.
The US dollar came under heavy selling pressure, which sparked a big move in gold and other commodities. I will show you the developments in gold in the video above and point out a gold stock worth looking into.
We have just brought on a brilliant resource analyst, James Cooper, to head up our new commodities project we’re calling ‘The Age of Scarcity Attack Plan’.
If, like me, you think the next bull market is going to involve commodities in a big way, then you should sign up to the event here.
Until next week,
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Murray Dawes,
Editor, Money Weekend
