It’s quickly coming to the end of summer, the U.K. is shuttered for a bank holiday and volumes are reportedly pitiful.
It would be difficult to take anyone to task for writing today off as just another day to get through. And then we’ll see where things adjust. It doesn’t bolster the ‘get in there and trade up a storm’ camp, that a week from today it’s the turn of U.S. markets to enjoy a long weekend.
But, as former fund manager and FX trader, Richard Breslow notes, at the risk of making more of things than they deserve, there are still things to be learned by this price action. Such as it is.
Equities simply want to go up. If you want to trade them, try to avoid getting into debates about why, how far, or is it right. It’s just proven too difficult to sort out the conflicting fundamentals. Someone said to me on Friday that it all boils down to supply and demand. And that struck me as a very good way of thinking about it. It’s become a technical trade and should be treated as such. Pick your levels and go from there.
Shares aren’t ignoring troubling news. It would seem that traders need to figure a way to get in. Benchmarks remain as cruel a set of competitors as they have been the entire ride up. Here we sit at all-time highs in the S&P 500, and it trades like people are short. It’s been so much easier to navigate this market without an opinion. Just a chart. This past February really shook people up, but it was after we revisited those lows in early April that many never recovered.
On the flip-side, the dollar acts like traders remain long. The pluses and minuses ledger is long and valid on both sides. But the hard facts, as we know them, are keeping investors stubbornly bullish. And analysts, with their forecasts, steadfastly bearish. That’s a recipe for making no one satisfied. Which is why we keep lurching back into the range.
It’s often easiest to understand a day’s price action, by looking at the mirror image from the day before. Check out last Thursday and Friday before concluding the Fed Chairman Powell broke new ground at Jackson Hole.
Currency traders like to debate what is a safe haven and why. It’s been a tough answer to come by and then monetize. Primarily because we have serially had very different, and often rapidly changing, sources of worry. One medicine doesn’t cure all afflictions and in some cases is adamantly contra-indicated.
The German Ifo report may be enough to make groggy traders forget Italian politics for the day. But that doesn’t forgive not keeping an eye on the Turkish lira.
Have you ever experienced another time with so many moving parts? Or when news, such as tariffs and sanctions, can be simultaneously positive and negative for the dollar? How can such a deadly dull market, be so captivating?
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Author: Tyler Durden