Since the beginning of May, EUR/USD has been trading within a narrow 3-cent range, gold has fluctuated within a $120 range, while Bitcoin (BTC) has shown more volatility but remains around the same levels we saw three months ago.
Equity markets have declined over recent weeks, as we expected, correcting the overly strong rally. But again, we have yet to see any fireworks.
Also, as expected, commodity prices have declined significantly, and I have started to dip my toe in the water. We will probably need to do some work at these lower levels, but I am going to start picking up a few bits and pieces over the coming month.
While we all talk about investing, most serious investors have remained on the sidelines over recent months, letting short-term speculators play among themselves, taking short-term punts and honing their skills.
As we enter August, we should expect the past three months’ activity to continue, provided the unexpected doesn’t happen. But in September, and definitely in October, something is bound to happen to wake these markets up.
The shooting of Trump and the resignation of Biden had very little effect on our markets, and while we, as commentators, will try to make each move interesting, the truth is that it’s been a bit dull and uneventful in the markets generally.
That mantra of “there is lots of money sitting on the sidelines” continues, but it seems many of the owners or controllers of that money are in no mood to make big bets just now. And as any of my readers will know, I have been in total agreement with that sentiment for some time.
The fact is, I didn’t last this long by playing silly buggers when conditions didn’t warrant it. And it is because I have been around this long that no amount of gung-ho commentary is going to encourage me to throw all caution to the wind at this time of year.
In a world where we make our money from liquidity, it is natural for people to push some idea or another because we all need turnover. But as it currently stands, turnover has to derive from short-term speculators because the big players need better ideas over the longer term, and right now, there are very few, mainly because the political outlook is so muddled.
We have been discussing this since Biden came into office, basically because he wasn’t as business-savvy as Trump, and for Biden, it was all about spending money to promote an ideology rather than taking care of the economy.
I expected, whether they liked him or not, that Trump would easily return to the White House. And many hoped due to his return the American, or indeed Western world economies, would get back to pre-COVID growth levels.
What we have now is a complete mess in the USA. It is no longer guaranteed that Trump will win back the presidency. Moreover, the difference between Kamala Harris and Trump is bigger than anything we have ever seen politically, so it should be no surprise big players are sitting on their hands and waiting for something concrete to happen to force their hand into backing a big bet.
It’s all well and good to keep talking about what the Warren Buffet’s of this world are doing or talk about the inevitable skyrocketing of BTC, but much of this is nothing more than click-bait.
As you know, I am long on gold, which might come down a bit, and I am short on EUR/USD, which I hope will break lower. But these are positions I have held for some time, so my broker is not making much dough out of this old man, not at the moment anyway. But hopefully, things will improve over the coming months.
Over the years, I have developed a way of trading that I feel comfortable with, and the goal of every investor and speculator is to find a system where they feel comfortable with the risk they undertake and how they manage that risk. Many claim that trading outside of your comfort zone is the best way to make money, but as I have proven, that is not necessarily always the case.
Unlike most players, I am also happy trading any financial product, because I have a bias towards using my technical analysis skills. Of course, I prefer some more than others, but I don’t fear any instrument because over the years I have traded most of them.
In the old days, long before political correctness, most speculators and short-term traders could be heard saying, “if it moves, fuck it,” and for short-term speculators, I believe this is the attitude to hold. However, at the other end of the spectrum, we have many players in the business who are forced to take longer-term views because they or their clients have long-term commitments that need hedging.
I came into the business as part of a major organization, Merrill Lynch. Our main objective back then was to advise companies, industrialists, and other major investors who needed to use the markets to hedge their day-to-day activities, rather than make a quick buck.
Over the decades, I have moved my main focus away from these industrialists and large players and concentrated more on servicing the massive numbers of speculators, who have mostly entered our business since internet platforms and smart phones were rolled out. While I am comfortable advising any user of the markets, it is clear that the views and objectives of larger players are often much different from those of the smaller or occasional punter.
However, that said, I still offer the kind of advice in my reports that I would give to major players because ultimately, it’s about forecasting what the markets will do regarding general trends and profitable opportunities.
I do shy away from the modern trend of telling people how to become millionaires on one trade overnight because making serious money in our business takes time, effort, and discipline. It’s all well and good to say, “BTC is going to the moon!” But at $70,000 a pop, the days of it doubling or tripling over a few weeks are probably history.
What I am sure of is that while many markets today are at the same level they were three months ago, in three months’ time, we will not be where we are today, so we should use the present time to prepare and position ourselves for what’s to come.
What that may be, nobody knows, but that is what makes this business the greatest industry in the world.
The post The Markets Cannot Keep Treading Water for Much Longer first appeared on JP Fund Services.
The post The Markets Cannot Keep Treading Water for Much Longer appeared first on JP Fund Services.
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