Markets a look ahead this week appears to be much of the same.
- heightened volatility
- continued talk about ‘high’ inflation and how to fight it
- the FED looking a +50pbs rate hikes, maybe
- China’s PBOC propping up risky assets, wut?
Last week we witnessed an epic collapse in Chinese stocks, maybe you noticed as well. During the watershed decline only brave and experienced investors stepped in an bought. Fortunately, yours truly stuck his neck out and bought CHIR, a Chinese Real Estate EFT. See chart below of the collapse.
You can read my setup for this trade here. To be sure, sometimes great timing works to your advantage. Fortunately, this trade could be a great 2022 lotto trade. Opportunities happen at the strangest times. I’ll post more specific details in a later post, but the idea is to move my stop loss higher as China recovers from the shock.
Federal Reserve
The Federal Reserve released their 2021 financial statements. How excited are you? You can find them here. Bottom line, the balance sheet is huge because of all the asset purchases. Indeed, it will be interesting to see if asset sales can succeed without disrupting the markets. Also, talk of much aggressive rates hikes to combat inflation are seeping into the current narrative driving the markets. Something to keep an eye on.
Bitcoin trade update
Well, after being promptly stopped out last week, my Bitcoin trade is back on. For sure, whipsaw trading, when you exit a trade right after putting it on, is part of trading. Extraordinarily frustrating, yes! But a necessary component (or headache) of a sound risk management system.
You can view my analysis and trades here, here and here.
Fortunately the trade is currently in the money, but I’m growing frustrated and impatient. In times likes these it’s hard to not overtrade. I’m fighting the urge.
Conclusion
In any event, trading this week should be much like the last. More importantly, equities appear to be finding solid support at current levels. The excess valuations demonstrated by technology stocks during 2021 were fully rinsed during Q1. This leaves the door open for more normal valuations to be realized going forward. In my opinion, equities remain a vital part of any portfolio seeking to outrun inflation. As an added kicker, China is willing to step in grease the wheels which is very bullish, see here.
Bottom line, nobody likes a permabear, so keep an open mind.
Remember, mind your risk of ruin.
Market Analysis and Trades –>
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