While The Old Man’s Away, The Markets Will Have to Play Without Me!

Over the past few months, market narratives have fluctuated wildly. In reality, however, compelling reasons to trade have been relatively thin on the ground – unless you’ve been scalping or jumping in and out on short-term technical signals.

I’m all for doing your job when you’re paid to do it and playing the game when you’ve nothing better to do. But I’ve never been a great fan of trading during the summer months, when volumes are thin and half the market is busy soaking up a few rays or building sandcastles with the children.

After all, traders are human too!

Taking a more relaxed approach has largely paid dividends. There’s still plenty of ammunition available for when markets begin making more sense and everyone returns to the office.

Granted, we’ve missed the occasional opportunity. We were probably a little too cautious about buying Bitcoin when it was trading near 60,000, but we did manage to pick up some gold on the dip at an excellent level.

More importantly, we refused to get carried away by the same tired narratives being recycled day after day, particularly around artificial intelligence.

As we’ve discussed repeatedly, AI is an enormously important technology. But many AI-related stocks have been priced as though disappointment has been permanently abolished. Experience suggests that whenever investors start believing that, disappointment is usually waiting just around the corner.

Oil, meanwhile, has been a market of conflicting opinions, changing directions and enough geopolitical drama to keep every commentator permanently employed.

Given its importance, we’ve all felt obliged to offer a view. The truth, however, is that few of us genuinely knew where prices would be the following day unless we buried ourselves in the charts. Even then, we risked being left whistling in the wind if Trump coughed – or if one of Tehran’s more excitable clerics decided to pass some wind of his own.

Anyone buying WTI below $70 or selling above $90 would have done reasonably well over recent months, and we’ve discussed that range on several occasions.

Only last week, I suggested looking to sell above $90. However, the market never reached that level and, with me heading away next week, I’m cancelling the idea and will reassess when I return.

There’s no prize for leaving an unattended order in the market while you’re trying to enjoy a holiday. Protecting capital matters more than forcing a trade simply because you mentioned it last week.

In the wonderful world of foreign exchange, I remain negative towards both sterling and the euro. Looking across Europe, I struggle to see meaningful growth or credible economic solutions emerging while the current leadership continues dragging the continent down the same tired path.

Could the dollar weaken over the coming weeks or months? Possibly. But that would probably have more to do with Trump and geopolitics than with European governments suddenly discovering how to sort out their economic mess.

With the US midterm elections also approaching, taking a sizeable punt on these currency pairs could prove more troublesome than it’s worth.

I’ve advocated selling rallies in EUR/USD for the best part of a year, and generally, that strategy has served us well. Last week, I suggested that shorting the pair above 1.1800 might offer another decent opportunity.

Once again, though, I’m cancelling the order. I don’t need a currency position ruining my holiday, and there will always be another trade when I return.

As previously discussed, I’m short some beans and wheat, and both positions could still prove worthwhile. However, I’ve placed protective stops above the recent highs in case renewed attention surrounding El Niño sparks a bout of panic buying.

I’m also still interested in buying natural gas on a sharp move lower. Around $2.50 looks like a reasonable entry point, although I’d be prepared to hold that position for some time before it fully pays off.

We’ll see.

This week, I wanted to summarize where I stand and update the ideas we’ve discussed. There’s little point in handing out trading suggestions and then quietly disappearing when circumstances change – although plenty of commentators seem perfectly comfortable doing exactly that.

Next week, I’m away, and for the first time in many years, I won’t be taking my computer. Having spent the summer advising others to take it easy, it would be rather hypocritical not to follow my own advice.

I’m hopeful that September will bring better-defined market moves and that the final quarter will offer the sort of opportunities that have been noticeably absent over recent months.

Whether those opportunities turn out to be bullish or bearish remains to be seen. Either way, having kept plenty of ammunition in reserve, I intend to be ready when the markets finally give us something worth shooting at.

Until then, the powder stays dry, the laptop stays home, and the markets can misbehave without me.

Please note the political opinions expressed above are those of the author himself, and do not necessarily reflect the opinions of JP Fund Services AS.