The Only Thing You’re Guaranteed to See in this Market
Monday, 21 September 2020
By James Woodburn
Today’s Insider will be brief as Murray has an extremely compelling setup in a small-cap stock to take you through.
It’s Woody, by the way. I’m taking the reins from Greg today and Wednesday while he works on his latest monthly edition of Crisis & Opportunity.
He has the added challenge of being holed up in a hotel room for two weeks of quarantine while he and the fam relocate to NSW.
It didn’t stop him chairing our weekly editorial meeting while the kids tore the place up in the background.
Some good points and observations were made.
The general one is that we are entering a period of deep uncertainty in the markets. This is due to the US elections taking place.
But don’t expect it to be over on 3 November.
The country is divided right down the middle. It may swing a percentage point here or there. But we’re talking 51/49…49/51…it makes no difference.
It’s unlikely either camp will accept the result if it’s close. Both are already preparing for how they will react.
Progressive groups on the Democrat side are already preparing to take to the streets if Trump wins. While Trump has already seeded the idea that he won’t accept the results if they are close and he loses.
So, whichever way it goes you can be sure of one thing…there will be plenty of uncertainty. Exactly what the markets hate. More uncertainty means more volatility.
That said, the NASDAQ bubble looks like it’s already come off. It’s fallen sharply in the last couple of weeks. Perhaps momentum has already shifted, and the recent falls are part of the market pricing this in? We’ll see. Whatever goes on over there, we’ll have our eyes open.
Here in Australia we have our own uncertainties looming. JobKeeper is one of them. It’s propping up many businesses. And the cuts are due to start in the coming weeks.
I was talking to a friend of mine about this over the weekend. He has his own osteopathy practice based in Albert Park, Melbourne. He’s currently working at 10% capacity. He’s using JobKeeper, but is keeping that money on a separate part of his P&L, so he knows not to come to rely on it.
Fortunately for him, he knows he’s got a good business that can stand on its own feet when all this ends. But, he said, there are plenty of zombie businesses being kept alive. I believe him. What happens to those when this is all over?
Again, I guess we’ll see.
Uncertainty and volatility. Probably the only two things you’re guaranteed to see in this market.
By the way, thank you for your emails in reply to Friday’s Insider. It’s great to see so many likeminded and engaged subscribers.
I hope to publish a few of the responses on Wednesday. For now, though, I promised this will be short and I’m sticking with my word.
Over to Murray.
P.S. Today is your final chance to check out Shae Russell of Fat Tail Media’s presentation on the gold exploration boom happening in Australia right now. There’s a foreword note from Jim Rickards too. Check it out if you haven’t already, right here. It gets taken offline again at the turn of midnight tonight.
[WATCH] A Cobalt Bolter
By Murray Dawes
[Click on the picture above to find out which company is planning to be the only Cobalt producer on US soil. The US government wants them to succeed, so perhaps they are worth adding to your watchlist.]
Tesla is having their battery day tomorrow so we will learn a bit about the future of batteries and the commodities that may be winners or losers as a result.
Cobalt is one metal that adds plenty to the cost of a battery and there are some rumours that a lithium iron phosphate (LFP) battery may be announced that contains no cobalt at all.
If that is the case then the company I look at for you today will probably fall quite hard. So, if you watch the ‘Week Ahead’ video above and like what you see it would be advisable to wait until we see what happens at the Tesla battery day before doing anything.
The main reason why I look at this company today is because the chart is a perfect depiction of the structures that I look out for when planning trades.
You will learn about the areas of major waves where the best opportunities are found. You will also learn how prices set up ranges and the calculations you can make that will predict where prices should change direction.
You can use that information to help you plan out trades that have a high probability of hitting an initial target at the point of control (midpoint) of the range.
I show you how you can combine many different pieces of information to build a picture of where support and resistance zones will be found in future.
Rather than being one of the crowd that is constantly whipped out of positions by market volatility, you can learn to use that volatility to help you get into a position where you virtually can’t lose
Editor, Pivot Trader