Its Sunday so time for another update from the usual professional market commentators.
Friday saw some fast price action and mirrors what we have seen consecutively for the last 4 or so Friday’s. Market participants continue to appear very reluctant to hold positions over the weekend and this is usually a sign of a very shaky bull market. It was a week however which saw new all time highs for the Sp500 and new cyclical trend highs for the IBEX35 and the FTSE MIB. It remains a market high on leverage and low on hedges. We have, in summary, a nervous yet un- hedged set of market participants with correlations between instruments, sectors and indexes starting to break down. There is much to say here but Id like to not rush this and come back to this tomorrow with a more detailed CapSyn run through.
First up, from the market gurus, lets see Fitzpatrick’s latest report here:
To be fair to Fitzpatrick this report was written on Thursday last week. Thursday saw the sp500 achieve new record highs putting gold and oil under pressure and rates higher. I think Fitzpatrick is in danger of being whip sawed by the market’s moves which is common to many participants actively engaged. I see 40% of his fund is allocated to short the jpy. Its possible of course he is correct but for my own practice, as i commented at the time, that the 104 level usdjpy and the nikkei224 15000 level was a twin of challenges that tactically could be traded for a reversal rather than a continuation. Whether this short term tactical trade can run and become something more will be down to all the cross correlated instruments. I look forward to hearing from Fitzpatrick next Thursday for a more insightful update on asset markets as I expect some medium term clarity to emerge now across asset markets.
Here the CS wealth weekly strategy and allocations:
And below here is the AG report. I greatly appreciate the AG team’s views and comments.
They nicely supplement the UBS work, albeit without the cyclical models. As I’m a little skeptical on adding much weight to cyclical models other than seasonal bias and election cycles this isn’t much of handicap, in my mind.
Here the latest AG report which is pure technical analysis chart and price composition of the major asset markets. This week the technology sector “blew a fuzz” so AG take a number of the leaders and show us their charts. Whatever occurs from here (and there is plenty of technical evidence of long term weakness) volatility has greatly increased. Increased volatility means more hedging. So whatever happens in the near term, unless we get a very fast reversal of Friday’s action we should see more weakness if only its participant re-balancing of leverage and hedges.
FX wise, the euro appears to be in the process of ending her low momentum bull run vs the US$. If correct, this event would also support a step up in volatility as the US$ is still the world’s main funding currency.
Here MS with their latest weekly:
And here the daily technical strategy doc from JP on Friday:
And here CS with their FX daily:
All the best
Rich