I’m not so keen to know what caused the market move, because what we should do matters the most. I guess the Evergrande crisis might be the major contributor of today’s market crash, especially HK . It then quickly spread to other markets, e.g. Nikkei 225 , Europe and US markets.
Firstly, let me brief the Evergrande crisis. Evergrande, a Fortune Global 500 group enterprise, is a top 3 real estate enterprise in China with more than 13000 projects through out the country. Its debt issues emerged in recent months with a severe cash liquidity problem of unable to pay back its $300 billion worth liabilities. The enterprise is listed in HK with market cap dropped by more than 70% so far this year.
I observed US dollar, Yen and Gold got supported from this as they normally are served as safe-heaven assets. For gold , as I previous mentioned in my posts it’s likely to seek support from the 61.8% fib retracement.
I also noted that BTC has suffered a great loss toady by 7-8%. Looking at the chart, BTC acts more like a risky asset which has a negative correlation with the USD dollar index . However it dropped too much so there is another reason behind it. I don’t know what it is but what I want to point it out is the risk management. Don’t use high leverage to trade it. The high will blow your account. The nearest firm is around $40000 with long-term MA and flip structure.
In the end, financial markets are multi-dimensional and there is correlation between different assets. With more money poured into the ‘quant’ strategies, price movement of one thing will quickly impact another. Market will become more volatile. So stick to your rules, especially risk management. Stayer longer will make you become a winner!
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