Hold for mid-to-longer-term equity positions but get your stop-losses in, short-term wait for confirmation of a swing-low at the market level. Then look short (Inverse ETFs) into the close Tuesday, and rest of the week, says Ziad Jasani in his weekly video preview.
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• Global Equity Markets: In swing-high formation held together at support by Tech Stocks, Emerging Markets & Commodities, with more downside risk into the back end of the week.
• Global Bond Markets: Yields are likely suppressed front end of week on August 11 U.S. CPI miss, but have a high probability of bouncing on August 16 FOMC minutes and to end the week; implies Hold decisions on Bonds and Defensive Sectors over the weekend, but prepare to downsize Bonds, Defensive Equity Sectors and Preferred Shares mid-week onwards.
• Global Commodity Markets: The bounce is overheated, but not capitulated. More downside-risk on Gold/Silver the front end of the week as Chinese Industrial Production Data (August 13) adds strength to the yuan, up-side-risk (or hovering) for Oil front end of the week unless we see a breakdown below $48 into August 11 close. Both assets reverse aforementioned themes to end the week.
• Global Currency Markets: Downside risk-for the USD front end of week, however August 16 FOMC minutes likely adds a tailwind to the USD. $CAD is expected to start the week positive but then dragged down by Oil to end the week.
Theme for the Week: Q2 Earnings tapering off, economic data-flow tilted bullish to start the week, but bearish mid-week onwards; market behavior into the close August 11 isn’t strong enough to suggest opening long side trades over the weekend. Hence, currency markets and support levels in equity markets are again the focal points this week. If S&P 500 (SPX) slips below 2,435 we can expect a test of 2,400 – likely outcome to end the week. If the Toronto Stock Exchange (TSX) slips below 15,025-14,950 we can expect a move down towards 14,710-625. We maintain a defensive posture to enter the week – which means not adding to short-term long-side trades, while maintaining small position sizes on defensive positions (Bonds, Inverse on Markets).
Broad-Decisions: Hold for mid-to-longer-term equity positions but get your stop-losses in, short-term wait for confirmation of a swing-low at the market level before adding short-term long-side risk (no confirmation into August 11 close). Then look-short (Inverse ETFs) into the close Tuesday, August 15 into balance of week.
Weekly video Market Strategy Session, recorded August 14, 2017:
View the Independent Investor Institute trading ideas and strategies video here
