Daily Alert – Friday 23rd April 2021; Joe Biden rains on my parade

Mark NugentApril 2021, Daily Alert

Daily Alert – Friday 23rd April 2021; Joe Biden rains on my parade

It has been a hard week and month so far. As of mid-week, I was 1% down (AUDJPY short – see below). However, my S&P500 and Japan225 long trades were doing nicely and I felt they would yield 4% between them by Friday night. Then 8 minutes past 6pm last night happened. US President Joe Biden announced the suggestion that maybe he would increase capital gains tax to 43.4%. That is high. Now these things are never backdated but they could come into force on, say, May 1st? So that means the time to sell and bank some profits before the tax on those profits increases, is now. Equities dropped and took out both my trades at breakeven. Annoying to say the least.

Risk sentiment has not been consistent for two consecutive days this week. Monday was indecisive and Tuesday’s risk-off sentiment tempted me into an AUDJPY short (trading strong JPY on the sentiment). We saw a reversal on Wednesday as sentiment turned more indecisive and my trade hit the original stop loss for -1.0%. Things were more positive on Thursday until Biden rained on my parade and we ended the day strongly risk-off. Today has been risk-on as some of the equity drop reverses.

Meanwhile, the Bank of Canada became the first central bank to begin to taper (reduce) QE when they said on Wednesday that they would cut their CAD 4bln/week bond purchases by 25%. Things are getting better for sure.

Oil took some hits from the US talking positively about giving sanctions relieve to Iran, including oil, which would increase global supply.

Sentiment took a knock on Tuesday as Japan suggested they may (and later did) increase Covid restrictions in Tokyo, Osaka and Hyogo.

So where are we now, on Friday late afternoon? Equities, oil and GOLD are flat or slightly down on the week. On currencies, the GBP looks like it will be down on the week after a CPI miss on Wednesday. (I am bullish GBP). The EUR rose, as per my bias. The JPY tracked sentiment beautifully, but as sentiment changed every day, it was hard to trade and easy to lose as I demonstrated with my AUDJPY short. The USD changed direction every day and currently looks like it will end the week down. Commodity currencies were, eh, unreliable.

Hindsight trade of the week was shorting Japan225 on Sunday night and getting out on Tuesday night. I have no idea why anyone would have done that, so I don’t feel I have missed anything.
Brief videos of AUDJPY short and S&P500 and Japan225 long are available for members.
So, a tough week with a loss of 1%. We are 1.3% up on the month and 26.5% up as of the end of March.
We plough on.

Have a great weekend.

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