After a year long down cycle and losses of more than 40%, world market trends turned tentatively positive at the end of October and suggested weeks or months of at least interim rally. Responding to this evidence, we took a small entry position in the broad market in Canada and the US(hedged). What happened next was that the trend broke down again this week and we sold.
Often a trade like that will stay in play for a few months. This time it broke down really fast.
The trouble with the financial news and economic data is that the market will turn long before the data. So if we were to just react to the news or how we or our clients feel about things, we would be of no value as a service. The rational approach is to measure and count the actual money flow and respond tactically to the evidence as it comes.
For now, we are content to remain out and watch carefully as the markets search for its next support level.
Cory’s Chart Corner
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