Update on Markets: 27th July 21
Asia has broken lower as represented by the APEX50 below, led by the massive liquidation of positions in the Chinese internet names.
ATEC did not profit from the down-move by going short. But we are thankful we heeded the warning signs in the market as published back on 19th July.
As a recap, this is what we saw on 19th July and we think there are lessons here for the future.
After the APEX50 made a low on the 9th of July, it could not make further progress beyond its 20 day moving average (warning 1). Then on 19th July, we are alerted to further potential weakness ahead when none of the sectors could really show leadership (warning 2). This told us that our bullish view was wrong and even though we did not really know the DiDi event nor the online education clampdown was imminent, there were enough signals warning us to at least stay light.
The index’s MACD, as can be seen, could not muster enough momentum from buying activity to take it above the zero level (warning 3), and its RSI stayed stubbornly in the lower ranges (warning 4).
At this point, we are unsure where things might stabilize. We continue to watch for the evidence to form before committing to the long side.