Below the latest Swiss team’s comments on the major market indexes from across the globe.
Short term issues remain as were. On the short term, we have a bounce which is an opportunity for adding to hedges. Euro indexes have having been more over sold have enjoyed a higher bounce than the US sectors, thus far.
Of particular note the sx7p or euro banks have enjoyed a large bounce in the last few days and are at a reasonable hedging level again if you are either long euro banks or a trader looking for an decent profit loss entry point on the chart. (EXV1) is the Ishares IBIS listed etf.
Commodities are discussed and their mean reversion from a may tactical bottom is sighted. Bullion is also highlighted inc a mention of manipulation in the market. The Swiss team prefer to ref the US$ strength and equity strength as the explanation for now though the fact they, in addition to the FT and other market commentators, discuss the issue is note worthy in itself. They again stick to their secular bull intact though raise the
On the longer time frame, the market cyclical issues are also discussed which is of great interest.
We have some confusion in the cyclical road map here. Much commodity weakness indicating deflation, which should be bad for equities just as equity indexes remain close to record highs. Is the equity market indicating the perfect begin inflationary conditions in step with zero interest rates, renewed consumer spending? In other words a new secular bull market for equities? In my view, we are in uncharted monetary waters which would explain the sector correlation confusions and therefore cyclical confusions. The market will find its north eventually as it always has done in the past. Timing is, as always, the issue here. Policy makers can alter laws and debase their currencies to hold up values but there are always consequences for such actions and these will show themselves in prices, eventually. When they do clarity will be found in the various asset markets. As policy makers interferences are becoming more pronounced prices increasingly adjust in shock, mean reversion, moves. These shocks make trend trading particularly complicated. Trends run until they snap back in one lighting fast reversion to the real conditions in the economy. If markets were allowed to run their course in stead of being smoothed by central bank and policy maker “jaw boning” we would avoid these “heart in mouth” reversion to reality moments. As it seems there is little to no chance of policy makers stepping back we had better get used to trading in these circumstances.
Report here
All the best
Rich
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