Stop trading, start waiting

🧠 The Big Brain
When To Fade The Trend

And more importantly, when NOT to…

Yesterday was a beautiful trend day. Stocks went up, the dollar went down.

All was right with the world. And if you rode the trend, you went to bed feeling pretty pleased with yourself.

But, as always happens every time we have one of those days in markets, a lot of people were very salty…

“Nooooooo, this is ridiculous, the market’s irrational”

They could name 101 reasons why the stock market shouldn’t go up.

Yet up it went anyway.

Some faded the move early, because it had already gone up too much 

We’ve all done it at some point in our trading careers.

So, when should we fade a trend?

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⚡ The Spark
Ain’t no sunshine in Japan

Japan’s annualised 3M growth rate declines 2.1%!

All bets are off!

There is no way Japan returns to ‘normal monetary policy in Spring like Ueda mentioned last week.

Here’s the overnight print of their growth.

Struggling: with an economy that is really in the doldrums, how could the BoJ think of exiting easy monetary policy in Spring like has been mentioned (and even we had mentioned it too!)?

Especially with recent inflation prints showing a disinflationary effect…

Huh?: what’s interesting is all of the expected inflation increases are baked into wage growth data for Japan…

But currently, the UK likely has very positive real wage growth.

@fink.tok

Wage growth is outpacing inflation which is GOOD for the #ukeconomy, but is it to do with any policy or to do with global effects? #ukecon... See more

So can a similar relationship start to form where Japanese inflation decreases, while wage growth increases?

An interesting question to ponder perhaps 👀

💡 The Lightbulb
Stop trading, start waiting

Back when I first started Macrodesiac, I shouted about a specific trade that many of you OGs will recall…

I am seriously annoyed.

I exited this at an average of $19-$20…

It’s now trading, 4 years later, at $44.

Ouch: I love and hate trading.

It’s one of those things that can be frustrating as hell and not suited to anyone ‘normal’.

But I am really falling in love more and more with the longer term investing strategies, especially as I get older.

Deeper thematic dives into stocks and ETFs and then just sitting for ages on them, rather than the hustle and bustle of intraday craziness on FX (although I will always have a go).

The old way: this will be the focus again of Premium going forward.

Getting back to our roots of mentally unsound, but always well researched home runs to just sit on — with a sprinkle of FX mixed in.

The goal: the goal of Fink is to get you… Finking.

It’s to provide detailed thoughts for you to take away and use in the best way possible — to develop your own ideas and way of doing things, while of course providing the best investing opportunities possible.

PS… that bond shout from July is now ticking up in line with how inflation, and therefore rate hike expectations, have fallen drastically in the UK!