Market in uncertainty -Syrian war drums
Wars are never a favorite thing for markets. Whenever there is this kind of political uncertainty and talks turn to war- markets react just one way- they go down. Than slowly as the fog clears those sold off stocks come back to life shortly thereafter. It becomes a shopping mall for bargain hunters. These days this tough talk on Syria has spooked the markets beyond reasonable doubts. We have seen clearly how the markets have dropped on Tuesday and they can drop again on any headline driven tape.
We as traders look for price action. Price action is the king. No trader should avoid the headlines and take risk on in times like these when you don’t know what will happen next, which way the tape will run. There are time to have risk on and there are times to have risk off. This last week of August was the time to take risk off. The tape was sluggish due to the seasonal dog days of Summer to begin with. Most bigwigs on Wall Street are on vacations, enjoin the beaches and Hamptons.
What happens in August the sellers get an upper hand. Because buyers are not putting on risk, selling becomes a one way street. Volumes thin out and markets drop even on low volumes. Because most of the price action happens on the sell sides, the market tanks.
Add to this the War Drums and talks of military action, and now you have magnified the risk to the down side. Downside is where you can make money though. If there is a Syrian war, it will kick the market one direction. Most likely to the downside. If there is a military strike this weekend watch how that resolves when the markets open on Tuesday.
Today is Sunday, I am writing this on very hot morning. Its already 88 deg here, and the sun has started to melt things up. Keep the powder dry and capital safe and see you next week.