Daily Alert – Friday 9th July 2021: Thursday’s tantrum simply vanishes

Mark NugentDaily Alert, July 2021

Daily Alert – Friday 9th July 2021: Thursday’s tantrum simply vanishes

The markets went crazy on Thursday. Like a tired child, everything just became too much. The delta variant, ongoing tensions between the US and China, a good few misses on key economic data, tensions within OPEC+, global labour shortages and China’s tech crackdown all coalesced. The market’s face went red and then there was an explosion. Equities dropped like a stone. The US 10-year yield dropped. The JPY soared. The USD dropped. The commodity currencies fell out the sky.

We know a reversal cue when we see one.

Today’s reversal is almost total, with all of yesterday’s losses being recovered.

In the usual style, I placed a pending, long order on Japan225 as it had fallen a long way, exacerbated by the strong JPY, and was sitting on support. I was triggered today and am currently 3.5 x risk in the money.

WTI (oil) did not take part in yesterday’s tantrum. Having had its own little tantrum after Monday’s OPEC+ meeting failed to reach an agreement on oil production hikes, its recovery had started on Thursday. As previously reported, Tuesday’s attempt to trade the reversal failed and I was lucky to get out at breakeven. I had a second bite: Wednesday’s pending long was triggered on Thursday and today’s move up takes the trade to around 2.5x risk in the money.

I steered clear of currencies as they continue to make me nervous.

So where are we? Equities will end the week where they started, despite the emotional melt down. Good recovery equities. This is a life-skill. WTI is also flat. GOLD a wee bit up.

Trade of the week. The whole week? Nothing really. Next best was Japan225 long today or anything involving the JPY provided you had the foresight to get out before today’s reversal. I will give myself 5 out of 10 for my Japan225 trade.

Have a great weekend and I will be back on Monday after England have brought a football home, or something like that.

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