Not trusting some of the signals

In the short-term, markets look like they are about to play a little game which can be considered cruel.

‘Set-ups’ are suggesting rallies and lending to the June and July bottoms holding.

I’ll watch whether those lows still hold or make ‘lower lows’…..and in many assets/securities, I think they will hold.

The head fake may lie with many prices bouncing after having reverted to their long term mean but yet to register Oversold readings.

Keep in mind, that there is no rule saying both need to occur.

I think prices will jump a little, drag in a few more people and then spit them out again in the coming week or three followed up with another swoon.

Markets are cruel.

The price of the Baltic Dry Index and Aluminium are 2 examples, where they have mean reverted but yet to trade to weekly oversold levels and have bounced in the past day or two.

Experience and pattern recognition tells me to be patient for lower prices.

When your count is 3 balls and zero strikes, probability suggests you should ‘take a pitch’. You shouldn’t swing or chase a ball outside of your strike zone.

September 9, 2022
by Rob Zdravevski
rob@karriasset.com.au