By Luca Padovan,
Trading Journal 07.06.22
In the past two weeks we have noticed the end of a correlation that had been going on for several months.
The crypto world and the U.S. tech index Nasdaq stopped moving in unison; after seven consecutive weeks in the red, almost a record, Nasdaq started to show signs of life and bring home some days with a nice green sign in front while Bitcoin&Co continued to lose reaching an absolute record of nine weekly closings in the negative in this case.
The Nasdaq after seeing lows since the beginning of the year below 11,500 last week rose to 12,800 yesterday and then closed around 12,600 points.
While cryptos still quote today on the lows since the beginning of the year, with Bitcoin having tried to break above $32,000 but after the fall of the last or,m finds itself at $29,500.
Aside from Bitcoin losing 39 percent since the beginning of the year, the major altcoins all lose more than 50 percent with peaks close to 80 percent for Solana and Algorand.
On the commodities front we find oil still close to $120 per barrel and gold failing to pick itself up and forcefully exceed $1850 per ounce.
The constant uncertainty given by the war in Ukraine that seems to have no end combined with the trade freeze after heavy Chinese lockdowns and confirmations of restrictive policies from central banks are the right mix to put this 2022 on the list of worst years for financial markets.
Nearly every asset class is losing in double digits since the beginning of the year; U.S. government bonds have recorded their worst decline since 1861, more than a century and a half ago.
The only way to ride this rough sea is to give yourself rules, stick to a plan and not panic.
Remember your medium- and long-term goals and don't try to buy market lows, but increase the risk in your asset allocation gradually.
As mentioned above in recent weeks I am watching the 10-year BTP and T-Note very closely because I believe they are starting to have attractive prices and yields both from a speculative and portfolio positioning perspective.
I continue to be confident in some Nasdaq stocks, such as Paypal, and since this week I have also put the Usd/Jpy currency cross in my sights. Despite the relative strength of the dollar in recent months I believe the exchange rate has run too far and it is time for a possible reversal.
Maximum caution and some courage are a must!