The overnight ‘new Covid variant’ drops in Stock markets and corresponding lurches in other assets have brought prices back to where the most recent moves began, some weeks ago. These moves mostly started with compressions that subsequently ‘broke’ in the direction of new trends and now these compressions are being re-visited. This is almost always a second chance to ‘get on board’ and in fact it is our preferred entry point – these sharp reactions are best avoided, so buying now will reduce the risk of similar discomfort later on. Not all markets should be bought, of course – this is a chance to sell bonds. A further benefit of this technique is that you don’t have to risk much – prices should not ‘push through’ these compressions and if they do, by more than a token amount, get out. Charts:
Perhaps the best opportunity comes in UK stocks, where the FTSE has dropped sharply, into a thick band of support from multiple old compressions:
All signals generated by software produced by our friends at Parallax Financial Research www.pfr.com
