Rate Of ReturnHow was the asset performance in March? I'm currently focusing on this asset... Logic Investment Market Review 240407
Key points of this article:
𝒪 Asset performance in March
𝒪 Continued high commodity prices put selling pressure on U.S. stocks
◉ Asian markets—Hang Seng Index almost flat, Nikkei maintains gains
Hang Seng Index futures rose only 118 points in March, less than 1%.
Throughout March, I maintained a consolidation view and repeatedly mentioned in market reviews that the Hang Seng Index is not the most worthwhile asset to trade.
From a monthly perspective, the Hang Seng Index remains in a long downtrend since January 2023, with no recent positive news to support it.
Even though it is already at a bargain price, technically, there is still a possibility of a pullback to 15,000 points.
Nikkei 225 futures rose 3.29% in March, continuing the upward trend after breaking resistance over the past two months, though the pace of gains has slowed.
The overall uptrend remains strong, and buying on dips is the best strategy.
I had hoped for a pullback to 33,100 points before considering entry, but given the current strong buying sentiment, it may rebound near 36,550 points.
From a macroeconomic perspective, Bank of Japan Governor Kazuo Ueda has repeatedly mentioned that the likelihood of maintaining the 2% inflation target is increasing, and Japan's Consumer Price Index has indeed risen for two years.
However, historical records show similar increases occurred between 2013 and 2015, but sustainable benign inflation was not achieved.
Therefore, whether Japan can maintain its interest rate hike policy remains uncertain.
◉ U.S. markets—U.S. stocks continue to rise, Treasury bonds at critical levels
Nasdaq futures rose 2.18% in March, S&P 500 futures rose 3.99%, and Russell 2000 futures rose 2.48%.
The U.S. stock market remains strong, but with prices at high levels, it is difficult to position for long-term bullish trades.
Recent rises in commodity prices and strong non-farm payroll data have heightened concerns about inflation.
The market initially expected the Federal Reserve to cut rates in 2024, so any contrary news could trigger price declines.
However, trends are usually irreversible, and the ongoing record highs in U.S. stocks represent a major trend.
Thus, I eagerly anticipate any "bad news" that could flush out speculative buyers and allow us to enter at lower levels (blue line).
U.S. Treasuries show a slightly weaker right shoulder in a head-and-shoulders bottom pattern, with $109.8 being a key level to watch over the next three months.
◉ EUR/USD—Still in consolidation range
EUR/USD has been fluctuating between 1.064 and 1.107 for a long time, and barring unexpected news, this range is likely to persist.
Sell high, buy low.
◉ USD/JPY—Ascending triangle pattern
USD/JPY has formed a clear ascending triangle pattern on the monthly chart, a highly bullish signal.
This opportunity is as enticing as last month's gold breakout.
The biggest risk is that, unlike stocks or metals, the Bank of Japan has significant influence over the yen's exchange rate.
If the BOJ suddenly intervenes to cap the exchange rate near 150, even the best technical pattern would be invalidated.
◉ Cryptocurrencies—A major bull market
Bitcoin officially broke its all-time high in March and stabilized, but the extended trend over the past six months means long positions should be managed using daily charts rather than monthly ones.
Ethereum still has some distance to go before breaking its historical high, so it’s not yet a priority.
◉ Gold—Soaring after breaking records
Over the past two months, I’ve mentioned that gold’s breakout above its monthly resistance would present a once-in-a-decade buying opportunity.
Thus, the strong gains in March and early April were no surprise.
Entering long positions now offers a less favorable risk-reward ratio.
A pullback to $2,080 in the coming months would be the ideal entry point.
◉ Crude oil—Upper range-bound
After bottoming in December, crude oil has risen for three consecutive months and is now approaching its previous high of $92.6.
Although I still hold positions, I won’t consider adding unless it breaks above the high.
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