Archives of “March 5, 2021” day

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Inside the Mind

  
Analysis, Education

When I impulsively take the first type of countertrend trades (i.e. missed a good trend), here’s what is going through my mind:

  1. Woah, the move has already gone quite a distance.
  2. Sigh, I should’ve taken that entry earlier. I shouldn’t have followed my trading plan so strictly.
  3. Should I get in now? No, I cannot get in any more, I cannot chase the market, it’s too risky, I have no logical stop nearby, you don’t know when it might reverse down quickly.
  4. I have already missed the move. I need to wait to enter in the opposite direction when the trend ends.
  5. The trend has gone too far, it must turn soon
  6. Look! There’s a bit of resistance, the trend is about to turn, go short! (for an uptrend)

And the countertrend trade is made! Below are what I think are the psychological process at work:

  1. Observation
  2. Regret
    • Trading is always full of regrets. You always think you can do better.
  3. Indecision, uncertainty, anxiety
    • Fear of losing out starts to take hold.
    • When you don’t have a well-defined trading plan that caters for all scenarios, or if you don’t believe in your trading plan, you will face indecision and anxiety.
  4. Resignation
    • I  accepting that I can no longer enter in the direction of the trend.
  5. Synthesized happiness (sour grapes)
    • By cutting off that possibility (or imposing a self-restriction on my flexibility), my psychological immune system gets triggered to synthesize happiness.
    • My non-conscious processes immediately ‘downgraded’ the idea of trend continuation (if I can’t get on, the trend must be bad), and boosted the idea that the trend will end.
  6. “Makes sense” stopping rule, rose-tinted glasses (read this for more details)
    • My logical mind starts to look for evidence to support my subconscious mind’s assessment.
    • Once the logical mind sees any supporting evidence, e.g. momentum waning, some resistance, it will stop thinking and conclude that my subconscious mind’s assessment is right. Hence a countertrend trade is taken.

More from BOJ’s Kuroda – Bank likely to debate a ‘band’ for its 10-year JGB target

  
Analysis, Economy

The Bank of Japan Governor Kuroda is currently reviewing its policy and due to present on this at its March meeting announcement (March 19)

Bank of Japan Governor Kuroda sounding coy:

 

  •  says BOJ’s negative rate policy was able to push down yield curve, help prop up economy and output gap via lower real rates
  • says BOJ will likely debate whether to expand implicit band for its 10-yr JGB target, but more discussions needed before final decision
  • says whether to expand BOJ’s 10-yr JGB yield band is a difficult issue
  • BOJ sees need to enhance market functions but must also keep yields stably low as the pandemic impact on economy continues
  • BOJ must scrutinise the merits and costs of ETF buying
  • specifics on how the make the BOJ’s ETF buying more flexible, nimble will be discussed at the March review

Newswires reporting China has set its 2021 GDP growth target at over 6%

  
Analysis, Economy

There has been plenty of discussion over whether or not China would set a target at all.

Citing info in the Hong Kong Economic Times

Here we go …. China’s Premier Li says >6% is the target for GDP this year

  • 3% is the CPI target for 2021
Li is speaking at the National People’s Congress, delivering the ‘Work Report’
No change to the working on fiscal and monetary policy
  • fiscal policy to be proactive
  • monetary policy to be prudent

Everyone ready for the next OPEC+ meeting (on April Fools day)?

  
  Analysis
We are going to do this all over again really soon:
  • The next meetings of the JMMC and OPEC and non-OPEC Ministers are scheduled for 31 March and 1 April 2021, respectively.
Watch fro progress on vaccinations and economic recovery ahead of then for clues on this next meeting outcome – signs of demand heightening will enhance the prospect of an output hike next time around.

OPEC+ agreed to keep output steady through April. US shale recovery is still a divisive topic.

  
Analysis, Crude

A recap of the OPEC+ ‘no change’ meeting on March 4 via RBC (this is summary):

Saudi Arabia and OPEC announcing that they would forego any production increase for April.
Saudi Prince Abdulaziz continues to urge caution in the face of enduring uncertainties about the COVID-19 recovery, insisting that it is better to err on the side of prudence than opt for an ill-timed production increase.
On US shale:
  • Reviving shale production does not appear to be a principal concern for Prince Abdulaziz. When questioned about US production in the press conference, he first insisted that it was not a zero sum game but later suggested that the zenith of the shale revolution had already passed.
RBC say though:
  • We continue to contend that Russia remains concerned about giving yet another lifeline to US shale producers and bolstering a coercive US sanctions regime.
—
If you were following along during US time you’ll know oil prices rallid
A recap of the OPEC+ 'no change' meeting on March 4 via RBC (this is summary):

Major indices tumble with the NASDAQ/Russell index lead the declines

  
Analysis, US Market

Russell index falls -2.76%. The NASDAQ index was -2.11%

The major indices tumbled once again with the NASDAQ and Russell 2000 index leading the way to the downside. Feds Powell’s interview with the Wall Street Journal did not help hope that the Fed chair would look to talk down (or act on) the higher long-term rates. That did not happen.

  • The Dow industrial fell -722 point at the lows or -2.31%
  • The NASDAQ index turned down on the year (the 3 day decline has seen the index declined -6.506% That is the March 3 day decline since September 3)
  • The Nasdaq fell  -3.41% at the lows
  • The S&P fell -2.52% at the lows
  • The Russell 2000 index fell -4.42% the lows
At the close the major indices did recover some of the losses but still remains sharply lower on the day:
  • S&P index fell -51.25 points or -1.34% at 3768.47
  • NASDAQ index fell -274.27 points or -2.11% at 12723.47
  • Dow industrial fell -345.95 points or -1.11% at 30924.14
  • the Russell index fell -60.87 points or -2.76% at 2146.92
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