ASX 200 @ 5 October 2021 5 Oct 2021 – Market Watch
The last time I did an analysis on the ASX 200 was on 27 September (red arrow). I mentioned as long as the index doesn’t experience a successful push to 7500 levels, I would likely trim positions instead of collecting new ones.
With uncertainties stemming from the twin events of the US debt ceiling and Evergrande, the ASX 200 has tested the lower boundary (7150 levels) of the support zone (highlighted in blue). Even though the index closed with a pin bar and on the upper boundary (7250 levels), I still think it’s too soon to say that this is the end of the bleed.
As I mentioned on Sunday’s FB livestream, I am expecting the next 2-3 months to be a difficult period to trade. US President Biden has voiced out his pessimism of being able to raise the debt ceiling. If that is unsuccessful, will the printing of money end? Whether you like it or not, the global equity markets have benefitted from this additional liquidity and the thoughts/fears of even turning off the tap can send markets crashing.
Evergrande finding a majority buyer for one of its subsidiaries has injected some confidence into the markets; at least for the near term. I still think more needs to be done to restructure the huge debt but I’m cautiously optimistic that the Chinese government will step in. As it is, there is already a directive to government-linked companies to do all they can to help out Evergrande. Reading between the lines, this usually means buying the distressed assets of Evergrande. To get more of my commentary on Evergrande, you can watch the livestream recording (text me for the link) starting from the 16-min mark.
I have exited almost all of my positions last week and I am only left with one stock. Will I buy more? I am evaluating 1 or 2 possible buying opportunities, but I am not anywhere close to pulling the trigger yet. I don’t subscribe to the diamond hands philosophy, especially when it comes to my trading portfolio. Thus, I prefer to be very selective in this uncertain period.
How about you? Are you collecting more stocks now? Or are you keeping your powder dry and buying in when the retracement has ended, and signs of market rebound has appeared?
If you find this market analysis helpful, let me know in the comments. May the markets continue to be with us!
Disclaimer:- I’m a mid-term trader and I hold my stocks between 1-3 months. I’m using Trend Following strategies and my analysis will be from a perspective as a Trend Follower. I’m sharing these analyses for learning purposes and as always, DYOR.
