The "Trigger"!

It has been 13 years since I first got the taste of markets, and I have been addicted since then. Though it’s incredibly challenging to beat the markets consistently, the biggest takeaway from my journey is that you can be a successful trader/investor when you learn from your mistakes and always be a humble student of Mr Market.

The most significant lesson I have learned, which I want to share with you guys, is always to manage risk even if you sacrifice “some” returns.

Rest assured that you will be rewarded handsomely in the end.

Long-term readers know that I have been pointing out the strong momentum in the equity markets, which took everybody by surprise and thus “was” called the most “hated” rally. Led by the magnificent “Seven”, the rally has been swift and has been led by the hopes of a “Soft Landing”/ “Goldilocks”/ “No Landing”.

The economic data continued to favour the narrative since the beginning of the summer. Thus, more and more participants bitten by FOMO started to pour in money (you don’t want a 5% return in T-Bills when you can earn 20% instantly). The result has been a melt-up led by a likely capitulation and massive short-covering.

Nevertheless, the “overheated” markets always need a “trigger” or, as some say, “a reason” to cool off. We got plenty in the past few days, but are we in for serious trouble? Or is it done? Will the macro data play spoilsport, or is the “Goldilocks” scenario still in play?

Let’s dig in and answer these questions with some intriguing charts!

Let’s go!