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Don't know about Santa...

By: StudioCity'98



...but I want to be as long as I can get as soon as possible this week before the G20.

We've had a nasty Bear market primary move down. That's highly likely to continue after some period of time. But, more on that at another time.

However, during this last month's sell-off, we've wiped out much of the downside "tail-risk" that had existed in the markets waiting to be whacked. And that move has flipped Investor Sentiment negatively quite severely as measured by ..well, just about everything.  All the Stat & Probability measures are over-done, and suddenly every Tom, Dick & Dick are everywhere telling ya how far down we're going soon. "Yeah, thanks. Where were ya a month ago before we rolled over?"

Immediate downside risk is really quite low now. We do have massive asymmetrical risk in the market right now though. That one-sided risk is that way too many market participants are highly likely to miss the next move up when Xi & Trump meet in Buenos Aires next week for the G20 meeting. When they do meet only two scenarios are possible:

A. They meet and talk and don't reach a consensus, or at least they don't wish to release a positive message for mass consumption.  Ok then, no problem.  That has already been factored into price over the last month already. The markets are unlikely to take another massive leg down on that kind of negative news since so much negative Trade news is already discounted by current price.

B. The real risk is that they DO reach some sort of substantive agreement. Or more likely, they release some communique for PR purposes, even if it's only to say something inane such as "yeah, we like each other, and we're going meeting again at some point in the future."  A total 'nothing burger' for global media consumption just allow one another to save a bit of face. In this case, the Market is likely to go straight up for a Month. 2000-3000 Dow pts likely.

To me, this is a layup. The market has already been pushed down so much the path of least resistance is up right now. It feels like a compressed coiled spring waiting to be released.  I'm buying everything in sight and leveraging it with Futures and Options. In fact, I started buying the S&P 500 Futures when the Globex Market opened for electronic trading at 2:00pm PST Sunday night. So far, so good.

We'll see how this week goes.

BTW: Oil is likely to find a short-term bottom in here too. And Gold may pop a bit too as the $USD temporarily rolls over. Not much though, maybe $1280-1300. And not the beginning of a new Bull Mrkt yet. Likely people should take this opportunity to blow out of any Gold holdings. We'll likely have to wait until late next year for any real impulsive Bull Mrkt to start in the inflationary metal hedges, and it will begin from much lower prices.


[merely speculative thoughts, not advice] 

   

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