XJO Short - Potential Traditionals Retracement

ASX:XJO   S&P/ASX 200 Index

Date: 02/12/21

Time: 11:00 AEST

Topic: Traditional markets bearish

Forecast: A drop down to about to the red weekly supply zone (currently encroaching on it). Will be watching closely to see whether we reverse and gear up again, or are in for more prolonged pain


The traditional markets seem like they are experiencing some painful bleeding.

Since the March 2020 Covid dump, the world economies bounced back rather aggressively. That said I believe there is a growing disconnect between the Delta variant (and potentially the new Omnicron variant) and the economy. Along with this, there seems to be more division within the world relating to the vax , mandates, politics etc. Countries worldwide are having more aggressive postures towards one another (Russia-Ukraine, Chine-Taiwan & Israel-Iran). China has had to cut back on electricity usage and Europe has stated that over the winter months their citizen might experience. Russia has made new gas deals and is limiting output to certain European countries. America's days seem numbered under the current president with all-time-low ratings and America is experiencing increased rioting, looting and racial divisions. Worldwide inflation is seemingly skyrocketing and concerning, with the FED having printed roughly 40% of the global USD money supply since the start of 2020. There has been a large increase in the purchase of precious metals by banks and citizens which makes me think this isn't over.

Whether things will get better, or we head into more prolonged pain with a potential for a Black Swan event, time will tell. If you have an equities portfolio, I would consider either selling your position into cash, hedging your portfolio with inverse ETFs or long puts (that way you avoid selling out of your positions and incurring CGT ), or a more risky play is entering a short position.

I am waiting for a proper bounce out of the supply (turned demand) zone and confirmation from news and the algorithms, before I enter long again

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