The market is what you make of it. It’s complicated if you try to assert your dominance over it, and it’s simpler if you follow the weight of the evidence. Over the past couple of years, the market has had to factor in different types of shocks, and if there’s anything that holds validity in the market, it is ‘Never Say Never’. If Crude Oil can trade in negative, then Nickel can rally by 80% in a day. Sure, these are isolated events and aren’t part of the daily moves, but they’re a part of the market. And every now and then, something comes up that makes even the most seasoned players go, ‘Woah’.
As we speak, commodities such as Crude Oil, Nickel, Aluminum, Steel are making historical highs. The Dollar index is trading close to its 2-year highs, and precious metals are finally showing up. It’s been a while since Gold and Silver have been a part of a positive discussion and it seems like those times have finally arrived. On the flip side, the equity market has become extremely specific with regards to positive trends. Sectors related to Energy, Oil and Gas, Commodities, sprinkled with a little bit of Infrastructure, are now dominating the space. So, the Growth vs Value debate is still on, but the tables have turned. It’s time for Energy, Industrials, and Financials (Value sectors) to make their case, and they seem to be making a pretty good argument for themselves so far.
The trend is where it’s been, Commodities and Currencies are in the limelight with clear directions. Stocks and Bonds are sideways, at best. But what’s in it for you? Well, if you’re finding your footing in this market, you can start by focusing on the asset classes. Learn about which asset classes are doing well, and why. Focus on the sectors that are related to those asset classes and identify the trends there. Study intermarket analysis to understand the asset classes could have an impact on one another.
We are in the midst of several different variables showing up in the market with every day throwing in more information than the previous one. All this, while getting on with life in a pandemic and the more recently disturbing news of Russia invading Ukraine. It is easy to become overwhelmed by the events that dominate the world today. It has the power to impact every one of us in different ways. And if you are feeling a little out of sorts, its all right. You are allowed to. Take a break and focus on your health. If you think of it, we’re all just like the charts we analyze. We all experience Bull, Bear and Sideways markets. We just don’t have an exchange that is monitoring these levels on a daily basis. Thank God!
Here’s hoping that the we’re all able to get through difficult times and difficult markets soon.
Until we meet again,
Rashmi Bhatnagar, CMT