Market Before The Open, Friday 9 August
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Was That It? Are We In The Green And Sunny Uplands Now?
by Alex King
In yesterday’s note I highlighted what may have been a local low in markets, using the QQQ as an example. And yea verily did this prove to be the case, with a big +3% move in the Nasdaq yesterday, +2% in the S&P500, Bitcoin on fire, etc.
We finished the day with a great presentation by Yimin Xu, walking us through what is going on with the “carry trade” (you know, the latest thing that everyone is an expert on with 2 days’ experience of yammering about it on Twitter), the Federal Reserve, the US economy and so forth. You can find the recording right here:
Yimin has written our macro work for many years - I’m delighted to say he has now launched his own research service published on our ’Cestrian Stocks Symposium’ platform. You can learn all about it, and take a 7-day free trial, here.
During Q&A, one of our longtime and super-smart subscribers (that would be Ron) lobbed the sounds-simple-isn’t question of, OK smart-a**, you all said there was a Q3 correction incoming and made a big fuss in July about rising risk and protecting assets and whatnot, well done; but now what - when is it safe for equity investors to get back in the water? And my personal answer was - QQQ will tell us. If QQQ can turn yesterday’s bull move into a sustained up-move, and hold over $449 and turn it into support for another leg up? Then there’s a good chance that the Q3 seasonal correction was just faster than last year and we’re done. But QQQ heading back down below $449 likely means we aren’t done here yet. The QQQ led the correction downwards from mid-July; it will lead the recovery when it comes. And I do think it will come - we remain in a bull market in my view.
All of this is just opinion, the market could plunge today or tomorrow; the important thing is to have some context for where it might move and how one might take advantage of such a move - and how to protect oneself if the market does the opposite to what we expect. The charts we publish here daily can be used to plan hedging, stop-losses, profit-taking orders, you name it.
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