Short Term Trading Weekend Lounge: 19-21 Jan

Originally posted by lifeguard22 ↑

I think there’ll be a rebound too. Why?

1) Because that would be pleasant, thank you Mr Market.

2) The S&P500 closed at a record high on Friday - + 0.4% to 2810 - as did the NASDAQ - +0.6% to 7336. There is no way that Trump will let the Government shutdown happen; he needs all the positive momentum he can positively get at the moment.

But here’s an economic conundrum. Surging US stock market. Sliding USD. Surging AUD, and retreating ASX. Hmm. So... Stocks in the US are going up, and may continue to do so, as (amongst other drivers) US exporters benefit from the sliding USD. But our market is going the opposite way; our commodities - in particular in the mining export sector - are being dramatically affected by the rising AUD.

So what will happen..? Well, bouyant growth in China - set to continue throughout the year - will eventually start to correct our commodities problem, and probably regardless of the rising AUD. And we have a long way to travel (ref: index chart posted earlier this week).

It’s possible that the USD starts to recover, which would assist with our commodities correction, and this rise in the USD would push the AUD backwards.. or... and this is the big one that has some analysts in a panic..

...the USD continues to drop, as the global market sees the US economic recovery as more of a debt-laden pipe-dream, and they add this to the overwhelming negative sentiment about the current (belligerent) foreign and economic policies that the US has adopted and... hmm... We could be about to witness a very sharp and dramatic short-term correction in the US market that would crush any momentum that we had been building over here.

So. If we decouple our economy from the US, and swing our focus towards China - as the world seems to be doing re: petrol-dollar and Yuan adoption - we may ride out the worst of it. And don’t rule out - Tin Foil Hat Weekly subscribers - that the current highs have been a well-timed push, lead by Chinese money, in order to precipitate an even greater collapse, so that the swing to China seems inevitable(!).

But, when will this happen...? Well. As we saw in the MM sector, ‘Higher highs’ don’t last forever, so this correction will happen at some point. Just not next week.

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BBC reports that the US Senate failed to pass a bill extending Government money and that this means the US Govt will shut down for the first time since 2013. Now, in the past, such shutdowns have seen markets drop, on average, 0.6%. But, as a newsletter points out, the stock mkts were not as exuberant on these occasions as they are currently. So, is there a chance there will be a more substantial pullback?

pmd3nka (no clue as to future!)