IRL Crazy, Markets Calm

IRL Crazy, Markets Calm
Photo by William Fitzgibbon / Unsplash

DISCLAIMER: This note is intended for US recipients only and, in particular, is not directed at, nor intended to be relied upon by any UK recipients. Any information or analysis in this note is not an offer to sell or the solicitation of an offer to buy any securities. Nothing in this note is intended to be investment advice and nor should it be relied upon to make investment decisions. Cestrian Capital Research, Inc., its employees, agents or affiliates, including the author of this note, or related persons, may have a position in any stocks, security, or financial instrument referenced in this note. Any opinions, analyses, or probabilities expressed in this note are those of the author as of the note's date of publication and are subject to change without notice. Companies referenced in this note or their employees or affiliates may be customers of Cestrian Capital Research, Inc. Cestrian Capital Research, Inc. values both its independence and transparency and does not believe that this presents a material potential conflict of interest or impacts the content of its research or publications.

Stocks Don't Follow The News, Episode 404

by Alex King

According to, er, everyone, IRL be crazy right now. In the last ten days it has been restated in good faith that (a) China is about to invade Taiwan (b) Iran is two weeks from a nuclear weapon (c) the sitting President of the US may not be in control of his own destiny (d) .... I am sure there is a (d) and an (e) all the way through to (z) but surely that's enough crazy.

Markets' reaction thus far has been, meh. Even the Vix isn't up much. Personally in mid July I wound down my risk exposure by selling some positions to increase cash allocations in long term accounts, and did the same in short term accounts plus hedged a material long TQQQ position. Thus far this has probably been overly cautious but in my experience it's the moment that your own limbic system is telling you to get back in the water (don't be such a wuss!) when the shark comes along. So for now I'm happy waiting to see if in fact all this bites and we see a seasonal selloff, or whether it's To Da Moon time into year end. There's always plenty of time to wind on long exposure if markets start moving up with intent.

As always, it pays to react to price, not to anticipate it; but in my view it helps to have a map with which to navigate and to know which way to turn as events unfold. The charts we post here in the daily Market On Open note, available to any paying subscriber, are in my view a useful way of orienting oneself and understanding likely reversal, support and resistance levels in both the short and long term.

If you'd like real-time real-money trade disclosure alerts and a live ask-us-anything webinar each week, sign up for our Inner Circle service - consider doing so in July before prices rise 1 August. You can join up here. Remember, one week to go before prices rise.

So Let’s Get To Work

As always in our market notes, we deal with long- and short-term charts covering the main US equity indices - that’s the S&P500, Nasdaq-100, Dow Jones-30, and the Russell 2000 - plus bonds, volatility, oil, and key sector ETFs. You can use these daily notes to help you navigate long-term investments, and/or to help you action short-term trading. Any paid-tier subscription here gets you these notes every trading day.

Short- And Medium-Term Market Analysis