Suitable speakers: Swap market outlooks
As has been the case for the last few years, January’s monthly STA meeting takes a panel discussion format – where we continue to encourage audience participation. Seeing as they were getting three speakers for the price of one, the house was full of eager analysts wanting to listen and compare notes. They clearly enjoyed the brief presentations where, using very different methods and thinking, the speakers – who were allowed to over-run by the moderator (for obvious reasons) – stirred up quite heated debate. Interestingly they all agreed that technical analysis was an art, not a science.
Stéphanie Aymès, senior TA at Société Générale, chose to focus on two markets (commodities and bonds) and two events (risk off in the first half of 2016 and risk on after that). Explaining how China has underpinned metals and food prices since joining the WTO, she saw the recent upturn in these as a continuation of the theme with agricultural commodities late into a cyclical bottom. Fixed income, on the other hand, had seen a change in disinflationary trends accelerated but not caused by Donald Trump’s election; the trend to higher interest rates ought to continue this year.
Zaheer Anwar, private trader and a popular speaker on the conference circuit, followed up with a look at foreign exchange and individual shares where he never has favourites or forms attachments – he just ‘follows the money’ and focuses on protecting has capital. Looking for high probability environments, he favours horizontal support and resistance areas (not levels) based on annual highs and lows, throwing in a 200 period simple moving average to fine-tune entry points. He doesn’t believe in 100 per cent automation because trades need to be managed and because ‘markets are organic’.
Finally Chris Clarke, managing partner at Lawrence Clarke Investment Management LLP, explained his systematic approach using bar charts and eschewing all oscillators, keeping an eye on correlations and using volume as an important filter. Kicking off saying, ‘no one had a clue about anything in 2016. I haven’t a flaming clue about the outlook for 2017. Predicting the future is equivalent to gambling or betting’ where he prefers Premiership football odds. ‘Price is the only thing which cannot lie; it is the only piece of honest information’. He covers 125 different markets, including 14 different grains and even adzuki beans (and he has no idea what these are).
I think we will all agree with his closing thoughts: ‘what we do is uncomfortable. It ain’t easy to put on trades that you don’t agree with personally. We must bring something different to the table’.
Tags: bonds, China, FX, shares, systematic trading
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