Daily Alert – Wednesday 27th January 2021: Equities tank before tonight’s Fed

Mark NugentDaily Alert, Jan 2021

Daily Alert – Wednesday 27th January 2021: Equities tank before tonight’s Fed

Global equities are moving down significantly, the fall starting just before lunchtime here in the UK. Some are saying it’s due to expected dovishness from tonight’s Fed meeting (7pm GMT) – in other words there’s been a leak. Would not be the first time. Other opinions say that a hedge fund sell-off may be required to fund losing short positions in “hated” stocks. (Many hedge funds have massive, short positions in stocks they consider to be poor and likely to fall. Trouble is, if someone, e.g., retail traders in the US can cause the price to rise, as they have with GameStop, then it triggers a vicious circle of buying as the hedge funds bail out of the short positions.) If other large stockholders think there’s going to be a sell off by hedge funds they will sell first. Herd instinct. I love it. Especially if you can act like a cheetah.

So tonight, I will be looking at going long on equities but I will be cautious and use a pending order in case the sell-off is not over.

Strangely, the JPY is not rising as you would expect given the sentiment. I will check again tonight and if it is doing the right thing, I will look at the tried and tested JPY/commodity currency sentiment trade.

Have a good evening and I’ll be back on Friday.

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