One of the disadvantages of dealing with the world’s financial markets is that they are not always in sync with our vacations and our desire for peace. Thus, on Friday, into the long and blessed weekend, we received a blow of declines that neutralized the joy of the increases of the beginning of the month.
this is what there is. All that is left for us is to choose the appropriate approach to dealing with this thing. It is very worthwhile to adopt the flow model according to which we understand that we do not have control over what happens but choose how to deal with it. The choice is simply to try to make the best possible decisions at all times and not to regret in retrospect the wrong decisions we made.
So what decision was appropriate for Friday? What decision did you make? buy? sell? do nothing? Will it stand the test of reality today? Let’s start the analysis.
On the long-term chart of the S&P500, two alarming things are seen: the resistance zone has worked and the technical indicators have stalled in their middle zone. Two essential signs of weakness. but…
– The index of the percentage of bullish stocks started to rise from its lowest level, as we thought last Monday and this is a sign that the realities in the market are starting to wake up.
– The Nasdaq 100 is still above a long-term fundamental Fibonacci support level that is considered a historic buying opportunity.
– The VIX index does not “manage” to develop an upward trend
– We are approaching the end of a year that is statistically bad (second presidential year) towards a year that is statistically good and mid-term elections with the potential for Republican optimism and expected efforts of the current administration to avoid a catastrophic crisis (in our view it will be reflected in the decline of the NASDAQ 100 below the Fibonacci support j).
Therefore, there is still a chance that the latest volatility could signal an emerging sentiment change, especially in view of the fact that it is less reflected in the VIX index, which embodies expected volatility and not current volatility. If you ask, I will explain the last sentence in the future.
Therefore, it seems that the decision for Friday should have been to “hold tight” and give the roller coaster a chance to climb again. There is a dialogue here between the rather scary graph of the S&P500 and the graphs of the bullish stock index and the Nasdaq 100 that convey an opportunity. We will deal with this decision here and there on Wednesday.
Wall Street’s freedom of speech
We started by saying that Wall Street ruined our vacation a little, but an essential element in dealing with Wall Street is a dialogue with the spirit of freedom. Freedom to earn money, freedom to work from anywhere, freedom to dream, financial freedom. One of Wall Street’s symbols of freedom of expression is Jim Cramer, the provocative commentator who emerged with the development of the Internet and has survived to this day. Like any provocateur he is controversial.
The freedom of Wall Street also gave birth to a basket fund that allows you to invest against Cramer’s recommendations if you are not one of his followers. This is a good example of the conduct of freedom. You should not slander the person. You can simply trade against him if you don’t like his recommendations and let the results decide. The fund is not yet traded so we will follow its story. The symbol brings a smile: SJIM (Short Jim). In any case, after Cathy Wood won a short fund in front of her, Kramer will also join the list so it will continue to be interesting here, including Jim’s behavior if the fund’s performance is good.
What came out of the tranquility of the atrium?
Another element of freedom is cryptocurrencies. There are many dark holes in the network and as we have seen again it is hacked, but at the same time regulatory measures are progressing in Europe and will probably also progress in the United States.
After not long ago we referred to the relative strength of Bitcoin (strength due to the very fact that it does not crash in light of the liquidation sales on Wall Street) we should also keep an eye on the Ethereums. Some experts actually point to it as the preferred alternative. It has a very strong resistance level at 1750. But, he too has maintained stability in recent times. More stable than the market. I added a graph of its standard deviation to the Ethereum graph and you can see how low it is. A low standard deviation represents a period of maturation before a significant move. Anyway, if you manage a portfolio on a quantitative basis (optimization of risk – return) then the integration of Ethereum in the portfolio, as of now, can contribute.
That’s it for today. The dramas are at market levels. When the picture stabilizes we will try to see current opportunities for shares. Have a happy holiday.
The author of the article is Ziv Segal ([email protected]) who deals in the field of financial markets, technical analysis, behavioral finance and mental training
*The above should not be seen as a recommendation to carry out operations and/or investment advice and/or investment marketing and/or advice of any kind. The information presented is for information only and is not a substitute for advice that takes into account the data and the special needs of each person. Anyone who makes any use of the above information – does so at his own discretion and sole responsibility. The company and/or the authors own and/or may own some of the papers mentioned above.
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