Hello traders
I hope you had a good week!
Speculation around the unfolding impact of the Omicron covid-19 variant has dominated trading this week. The VIX, also known as ’the fear index’, has doubled over the past month and exceeded 30 on Wednesday - a level regarded as significant by equity fund managers who will typically seek to reduce risk on this trigger.
For all this furore its easy to overlook the reassuring messages that are coming from medical experts around the world. Whilst it is still ‘early days’ (as they themselves identify), the encouraging signs are that this latest variant may pose less serious health risks as a trade-off for greater transmission. This is key not only in terms of mortality, but also the emerging hypothesis that in becoming the dominant strain and outcompeting Delta, it could possibly be self-defeating and spell the end of covid-19 as we have known it up until now.
I must of course reiterate that this is only my personal opinion, and I am not a qualified virologist. However, as your fellow human and investor, I do find reasons for optimism in the latest narrative (which of course is subject to change as the science catches up with time). My view also seems to be shared by hedge fund manager Bill Ackman, which might well explain his bullish statements on Twitter earlier this week.
With the immediate outlook looking somewhat uncertain given the debate around Omicron, it is more important than ever to revert to our process. With December now underway, we have just updated our Monthly Checklist Report for the new month which Trading Club members have immediate access to, and includes a new set of scores for many of our Checklists.
Here’s a quick preview of one of the Checklists that has caught my attention given the volatility seen in equities. Whilst I cannot reveal the scores to you here just yet, I hope to do so in the next couple of weeks. Members can of course view the unrestricted version at any time from the login area of our Trading Club page.
Just before I go, I wanted to share one additional chart with you which I thought was relevant to the inflation debate and Jerome Powell’s abandonment of the “transitory” label this week (suggesting that the Fed now sees inflation as more persistent than before). Commodity prices have come off a lot in the past month and are currently extending their biggest drawdown since the reflation rally began over a year ago. Could it be that the Fed has capitulated, just as the inflation regime is finally turning? Only time will tell...
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Have a great weekend,
James
Disclaimer: For educational purposes only. Even though we do our best to provide reliable data, you should not trade based on this information.
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