It is definitely a crazy weak week! I’ve just had 3 weeks of steady busy-ness and not a good time to be on “hold mode” I was hedging (and rolling) here and there when time allows (like what time have I got lately! not much hahaha. Some small gains made but I can’t wait for the trend to settle down a bit hehehe Where is Santa Claus when you need him? 🙂 Anyway finally, we got that US interest rate rise out of the way, I am looking forward to the market settling in.
What’s the chance of that… hmmm, I would look at several places, first the US Dollar, I think we have had a good 2 years of fair warnings that it will be rising, starting from the “tapering”, you’d think that companies would use common sense and reduce borrowings in USD or hedge its strength, and the stock market has “priced in” this stronger dollar. Whatever charts are “saying” or how you interpret it. No matter how “undervalued” stocks can be – they can always be sold off as well. (Reasons – too many to mention! And there is no point to discussing it) It all boils down to this – the market will do whatever it wants to do, need to manage the risks with position sizing — all the time.
(For people who are not familiar with the concept watch out for my webinars) or google it a bit – check the one from Dr. Van Tharp – I’m also offering a webinar / workshop about it so stay tuned).
OK what’s the risk — from the Fed statement — the pace for interest rate hike is going to be gradual. The risk to a stronger dollar on the US economy and company earnings have been evident last year. Global growth continues to lag the US and the Fed can’t just go about raising rates while the other major economies are still on stimulus mode. That said, USD is projected to slow down its upward move. That will help the oil price which is causing a lot of pain and “spreading risk” around the markets. That will improve sentiment. (Keep watching the oil price though because new supply is coming in without stronger demand.)
That’s why I’ve said there are major moves happening this December and January… when the sentiment about the market improves as well as volatility settle down and there’s more earnings-related news to focus on in the New Year. Prepare to position… meantime… enjoy the holidays …