Commentary
The Situation so far
There has been a lack of “real drivers” for the markets. This roughly explains the volatility all round. Results reporting season has almost come to an end. We have realised that the markets have reacted selectively to company results. This just shows a disconnection between sentiment and reality.
Particularly for the Singapore market, selective small caps have been running and have rewarded the courageous traders handsomely.
What’s next?
I continue to watch technical fronts as the market is fundamentally unstable. Technicals tend towards the bearish. However, sentiment can be the true driver. Look at what happened in Shanghai this morning. It can be reasonable to suspect robotic trading glitches that further spurred more reaction (2nd impulse noted this morning). Chaos Theory would suggest that it can even possibly be a 3rd impulse.
China is having its lunch break as I write this and I would suspect that prices may recover to reasonable levels after humans come back after a lunch discussion.
This may provide us with an opportunity to sell later today or even on Monday.
Why do this? Various index charts will show a 50% Fibonacci retracement in the last selloff over the last few days. However, a proper correction does not happen in 1 leg. It happens in 2, at the very least. So the next rebound may provide opportunity to trade the next leg down.
Feel free to contact me to discuss trading ideas as specific trading ideas are beyond the scope of today’s newsletter.
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