Daily Alert – Friday 29th January 2021: Profitable end to a difficult month

Mark NugentDaily Alert, Jan 2021

Daily Alert – Friday 29th January 2021: Profitable end to a difficult month

Unless things change markedly before tonight’s close, this will be the third consecutive week where risk sentiment changed every single day.

However, my well-signalled (on Wednesday) S&P500 long reversal trade came off, making 2.3% and avoiding a trade-free month for the first time ever. There is a video of this trade and the two prior non-triggered AUDJPY trades in the VIP Club member’s area.

The big equity move of the week was on Wednesday when indices sank due to a clear leak on Fed dovishness later that evening (which happened) and a belief that hedge funds would need to sell assets to pay margin calls on the spanking their colossal short positions were taking from well-co-ordinated retail traders. That story is not over. This price drop provided the entry position for the S&P trade mentioned above. So, thank you retail traders!

Equity indices will end the week slightly down. Oil and GOLD are static.

In the currency markets we are all over the place. The JPY is down on the week and, unexpectedly, the CAD and AUD are also down. Only the NZD is showing the expected bullish behaviour against the JPY. I suspect this is due to month-end flows and not fundamentals or sentiment. The GBP completes its third consecutive up week as the vaccination program gathers pace. (For those interested, I have read the AZ/EU vaccine supply contract and, as expected, the EU are playing political games. The phrase “best reasonable efforts” is defined and used 18 times. Even the delivery schedule is an “estimate”. It is pure political theatre.) The EUR is down on the week and the USD slightly up.

All-in-all another week where things were not quite right. However, there was more green on the economic calendar than red. Major central bank activity was limited to the dovish Fed: “Economic activity and employment moderated in recent months” and the ECB: “We have the tools to counter EUR strength if it threatens inflation.”

Trade of the week (if you discount the gambling going on with GameStop and others) was probably the S&P500 long reversal that I took. There was a sound rationale for the trade, and I entered safely with a pending order in case I was wrong. 2.3% in the bag at the end of an exceedingly difficult month. I’ll take it.

Have a great weekend and I’ll be back on Monday.

Members can access the VIP Club members area HERE