Market On Open, Thursday 12 June
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More Pause Likely
by Alex King, CEO, Cestrian Capital Research, Inc
The US-China talks concluded yesterday with an agreement-to-agree and a likelihood of an extended pause prior to finalizing any deal. True to form the market had run up in anticipation of news and then sold off a little bit on the news itself - nothing dramatic thus far, just a slightly weak close into the end of Wednesday. It remains to be seen whether we see a selloff here - and if we do I believe it will be just a modest correction, not a run-for-the-hills dump - or whether animal spirits remain intact. As I mentioned yesterday, whilst no-one can ever say ahead of time what is definitely going to happen in markets, you can look at a "fact-pattern" (which is McKinsey for “facts”) and try to determine which outcomes are more likely than others. And of late, the equity index charts have been looking more likely to usher in a modest correction than they have a continued blow-off move up.
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For me, learning to hedge correctly and to make money whatever the market happened to be doing was an enormous A-HA moment which transformed my investing and trading performance. Speaking personally I neither fear the bear nor hope for the bull - I’m happy either which way, which reduces my stress as regards markets to pretty low levels. And if you want to hear why stress is a leading cause of underperformance I would point you to none other than the lauded Steve Cohen (thanks to Yimin Xu and Chaim Siegel for sharing this one with me).
Anyway. Now that we are all cool, calm and considered? Let’s check in on how markets stand right now.