Markets with a new paradigm: Sell the highs

Investors are aware of the risk of slowing the economy and the real threat of a new recession

For the first time since 2002, the “buy the dip” status at a sold market does not work. It does not work now, because every effort to recover indices and stocks (on a global scale) starts to weigh New signs of weakening the global economy, new fears, new geopolitical risks, a new negative foundation, new tensions, another red sector that pulls the markets down and all this makes us ask ourselves the question: Is a recession approaching?

Investors are “drowning” in the wake of this year’s volatility, rising from the effects of tightening monetary policy around the world, trade tensions between the US and China, and the issues surrounding global economic prospects as well as the growth of technology giants, driving force behind US markets in recent years.

“The form of risk varies from” buy the dip “to” sell the high “- says Georg Shcuh, chief investor at Emea.

With the approach of the end of 2018, the S & P500 goes into negative territory after the benchmark failed to push itself from the October dips. Technological stocks are particularly under great strain.

“Buy the dip” worked after the recession in 2008-09. Now, the quantitative easing has become a quantitative tightening since the Federal Reserve has begun a move to reduce its redemption program, followed by the European Central Bank and the Japanese Central bank.

What’s worrying is that usually “buy the dip” stops when we’re already in a bear market or starting one. In other words, 2018 may not be the year in which a new recession will start, but there are certainly strong signs of an upcoming crisis.

Since last year, Trump cut corporate tax to boost companies, revenue grew 20 percent annually for the first three quarters in 2018. However, in 2019, forecasts show that these reports will be worse than those we saw this year.

Source: Financial Times

 Trader Martin Nikolov

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