Australian Shares

Is the market correction over?

David Llewellyn-Smith
Tuesday 7 December 2021
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Goldman is always bullish:

  1. Non-fundamental CTA supply Red Light.
  2. Non-fundamental Vol-Control and Risk Parity Supply Red Light.
  3. Low Liquidity and Massive MOC imbalances Red Light.
  4. Flat dealer gamma Yellow Light.
  5. Institutional Demand for index puts and ETF shares hedges Yellow Light.
  6. December Option Expiry Yellow Light.
  7. Fundamental HF De-risking Yellow Light.
  8. Credit Outflows Yellow Light.
  9. Retail BTD’rs Yellow Light.
  10. Buybacks Green Light.
  11. December passive Equity Inflows Green Light.
  12. Cash on the sidelines and GS Wedge Green Light.
  13. GS Bearish Sentiment and Technical analysis Green Light.

Bottom Line: Do I think we have seen the lows for the year? Yes. Am I confident in this call? No. Its time, not price. We need 1-2 more weeks to clear this supply and turn red light to green light. I expect a large covering day today into the weekend. I expect short covering to continue next week to give us the all clear signal.

#WJH (What just happened?)  here is an update on the week and set up.

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About the author
David Llewellyn-Smith is Chief Strategist at the MB Fund and MB Super. David is the founding publisher and editor of MacroBusiness and was the founding publisher and global economy editor of The Diplomat, the Asia Pacific’s leading geo-politics and economics portal. He is also a former gold trader and economic commentator at The Sydney Morning Herald, The Age, the ABC and Business Spectator. He is the co-author of The Great Crash of 2008 with Ross Garnaut and was the editor of the second Garnaut Climate Change Review.