IRL Crazy, Markets Calm
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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.
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So Let’s Get To Work
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