Approach the Week (ATW)

October 9, 2023

Monday Thoughts

You will have noticed that in light of the events over the weekend, I have changed the title to today’s post. War seems like a distant news story flashing up on our TV screens. I have never felt war directly, but my family has. It isn’t something that you can understand if you haven’t experienced it. I wish that none of us and our families ever will.

I am no geopolitical expert; that is a tough job. How would it ever be possible to politically dissect all moving parts that are influencing a conflict and then extract political thinking and a path forward on what’s to come? It is virtually impossible, especially when there is warfare in play. Just looking at some of the research reports I received over the weekend, the implications and permutations seem quite extensive, with the immediate extreme scenario meaning the bombing of nuclear facilities in Iran, which would then likely also bring in US involvement.

Remember that historically, markets have shown impressive resilience to geopolitical shocks. That’s why I am not calling where things will end up over the next few months. As always, I will be an observer, and we will analyse markets and setups as they are presented. If there is any playbook to look at, it is possibly the most recent Ukrainian tragedy and how markets have reacted. In general, there is always the initial risk-off reaction; then there is the realisation of the implications and likely duration of such a conflict in the coming weeks. Buckle up; this conflict won’t be solved overnight.

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Friday’s Charts should have given you plenty of things to ponder over the weekend. It was quite a response after the stronger NFP beat and equities turning around 2% intra-day and giving us a green candle. Also, note how Canadian employment figures were once again very strong.

ES hit the 200 ema on Friday’s strong recovery. Meanwhile, our momentum model is still indicating a short.