Do buyers or sellers have a stronger case to control market direction into Q1 earnings season? I outlined scenarios Monday here and Tuesday here. More tactical scenarios for this week, writes Ziad Jasani of the Independent Investor Institute in weekly video and commentary.
Here is Ziad’s market strategy video recorded Monday:
Here is Ziad’s market strategy video recorded Monday:
Recorded: April 9, 2018.
Duration: 1:04:12.
Major Index Direct Price Regression
When humans move very far away from normal routines they tend to come back home.
In markets, we call this mean-reversion. Currently, every major trading bloc presents close to or slightly more than 2 standard deviations away (near the green line or cheap) from their normal annual routines (black line in channels).
This presentation supports a macro market swing-low formation taking hold this week and pointing each space to their respective homes (black-lines at middle of channel).
But if we end the week below, we may be entering a new normal of Correction Part 2.
Trading Bloc Positioning
This chart compares major trading blocs back to the entire global equity market (ACWI) to determine which spaces are relatively cheaper.
Why? Capital flows usually tilt towards relatively cheaper spaces, especially if a macro market swing-low formation takes hold.
U.S. markets including S&P 500 (SPY), Dow (DIA) and Nasdaq (QQQ) present as the strongest opportunity areas, followed by Emerging Markets (EEM), China (FXI), India (EPI) and Brazil (EWZ).
The TSX, unfortunately, presents as relatively expensive (~2 standard deviations away), which implies that if a bounce takes hold, the TSX would likely still move up with U.S. markets but at a slower pace.
Since the late January – early February 2018 market correction has resolved to markets (ACWI, SPY) coming back down to their 200-day averages but left in bounce formation from April 6 we are in swing-trading mode with our short-to-mid-term capital and remain Hold with our longer-term holdings.
View the Independent Investor Institute trading ideas and strategies videos here.
