Key insights
- The author anticipates continued market volatility with a bearish bias, driven by geopolitical tensions in the Middle East. However, they also foresee potential short-term bounces triggered by any positive news regarding a peace deal between Israel and Iran/Houthis. The author believes hedge funds may attempt to buy dips in anticipation of a deal, creating temporary upward pressure, but the overall trend remains downward.
Hi everyone. Crazy times, huh?
So this week will be the unlike the last 4 weeks because the market is now finally beginning to price in worst case scenarios, especially now that late week tweet manipulations to keep oil down and the market up did not occur either like most previous ones to cause a nonsensical bounce before the next leg down.
So my question to all you pros is, what do you think the market will respond like on Monday? Or Sunday night?
Here is my opinion. While expecting further drawbacks/"corrections", I do believe there will be some bounces at times, even if only deadcat bounces, and the reason why is because there still has to be a hedge occurring in the event a peace deal is negotiated inside of the current 10-day ceasefire that was instated (yes, despite some trading blows still between Israel and Iran/Houthis).
I don't expect a liberation day fall necessarily on Monday because there is always a chance of a deal until the end of the 10-day ceasefire. However, there will be more dipping, but just one headline or tweet of a potential deal would be enough for traders and HFs to see the current dip and further dips as a must try buy just in case.