The wrong part
My bad. I’ve went short too early and too heavy.
The reason I’ve been wrong is double –
- I’ve broken my own assumption, that trendline is just a directional indicator, not a real resistance.
- Didn’t evaluated ‘the power of the pump’ – had to wait for momentum to keep on.
The right side
I’ve been calling this a bear market rally, and while everyone was focused on 1st Feb FOMC probably been the only one to predict this –
The idea that equities have a hard resistance in a high rates regime is valid, however where is this resistance level – that’s the million ฿ question.
Conclusion
It’s hard, almost impossible to call for top –
…and of course bottoms as well. However since inertia of good solid valuable stocks is to appreciate over time, and usually bear trends last less than bull ones, then I’ll leave shorting for professionals, unless some real opportunity will rise.
What’s next
Staying on USD sniping for long opportunities for crashes with confirmed breakout of valuable assets is a great strategy. Let’s look at Tesla –
I’ve drawn those fib level weeks before it hit the lows, and entered a long position in the orange line, however got scared and went out before their earnings.
The idea is not to chase a trade, wait for similar opportunities – however only for valuable assets, wait for confirmation and go on.
Next opportunity?
Need to research their current state after this crash, and of course the macro. Wait for inverse H&S or other confirmation pattern for breaking up to the upside.
It’s the economy, stupid. (macro outlook)
1st of Feb 2023 might be remembered as the greatest mistake of J Powell. It’s almost he’d transitioned from Volcker to Burns in short time, mainly his disinflation statement and absent of ‘higher for longer‘ (30 Nov ’22) hawkish statements that set the bulls on fire.
And there will be price for it. Inflation might peak again, 70’s history might repeat. We’re in a lose-lose situation for equities – either he’s gonna fix his mistake by repeating a Jackson Hole speech to crash the markets or inflation gonna make a nasty comeback, and then he’s gonna raise rates much more.
Therefore equities, surely tech/crypto are not an option in their current P/E levels.
Commodities
In a sticky inflation regime, commodities have better potential than equities. Some of them crashed so hard lately – Natural Gas, Cotton, Lumber, Oat, you name it.
NFA, keep it safe.