Market On Open, Thursday 24 April
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Can The Healing Begin?
by Alex King, CEO, Cestrian Capital Research, Inc
So far it looks like the April 7 lows were the lows. Various forces have been brought to bear upon the trade policy that catalyzed the present volatility in markets. Bond and equity market participants have had their say and trading partners have signaled their responses. For now the market is in a quiet period. This particular crisis is, I think, over, meaning that I don’t think we will see treasury yields hitting the 5-6%+ zone any time soon, and I don’t think equities will drop below the 2021/22 highs in this cycle. I also don’t think equities make a beeline for new all time highs, though they may get there in time.
This period now is a market to trade, I think. Unless and until the S&P500 gets up and over the 200-day moving average, I think we can expect volatility to continue. As long as one expects volatility, it can be handled and likely profited from. The only mistake is to expect calm where none exists.
Don’t Sleep On Bonds.
As everybody knows, it’s all over for US Treasuries. Their status as the world’s safest store of value is gone, destroyed, never to return. Even Ken Griffin has said the US brand may be damaged.
Hm.
Well, as you know from the yield and bond ETF charts we post daily in this note, we disagree. Further, we believe the very volatility in bond markets of late is an opportunity to achieve very good returns; perhaps from buy and hold but certainly from skilled trading.
You don’t have to be Bill Gross to make money from bonds these days. Firstly, there is a plethora of highly liquid bond ETFs available giving exposure to different maturities of US government bonds. Secondly, you can subscribe to our algorithmic signal services to help you trade these ETFs to good effect.
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Short- And Medium-Term Market Analysis
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US 10-Year Yield
I expect the 10yr to drop, but not in a straight line.
Equity Volatility
Settling at a higher level than was the case in the last few years - I think that is probably a rational assessment by put-buyers.
Disclosure: No position in volatility-linked securities.
Now, for our paying subscribers we move on to bonds, the S&P500, the Nasdaq, the Dow, and key sectors.