As anticipated, there was a rallying cry on Wall Street yesterday morning but things seemed to have fallen apart by the end of the day and much of the day's gains were erased.
What's weird about this sell-off is that there doesn't seem to be any specific catalyst. Things like the trade war, Brexit, and the Italian budget are commonly blamed, but these things have been in the news for months already.
Fear is a strong motivation and since most traders are humans watching things fall it's very tempting to join in and sell. However, as we know it's usually the traders with a more long term outlook who make the most consistent gains.
To be clear, I have no idea how much further south we could go. This might end today and we may be entering a bear market that lasts a year or more. I think it's still too soon to tell.
Today's Highlights
- A Look at the Charts
- Pure Gold
- The Korean's are Back!!
Traditional Markets
In terms of the major indexes, it seems we're sitting well below the 200 averages by now. The S&P 500, for example, is now in a loss of about 1% from the start of the year.
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Of course, this phenomenon is only new in the American markets. As we've previously pointed out, the China 50 index has already seen a drop of approximately 30% from the peak earlier this year.
Looking at the German Dax as well, we can see that the 200 day average has been broken during February's sell-off and never fully recovered.
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Pure Gold
Though we did see a pause in the safe haven sentiment yesterday, today gold is back in full swing.
Gold is the purest indicator of this attitude and it is having a fantastic October. However, even this isn't an astonishing update. We've been speaking about the metal sell-off over the last few months already and the long-term range is pretty clear.
The fact that it bounced off the lows of $1175 an ounce hardly comes as a surprise.
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Welcome Back Korea!
As we've said before, it's wonderful to see bitcoin and the rest of the crypto markets standing on the sidelines through the broader market sell-off.
Still, with all the flat-lining lately, we are due for a breakout still. One thing that I wanted to point out today is that crypto volumes are picking up again in one of crypto's key areas, South Korea.
As you'll recall, the Korean markets were one of the largest players during the 2017 rally. So much so that prices of cryptoassets in Korea often reached a premium of 20% to 30% higher than they were trading elsewhere.
Well, the premium hasn't returned but it does look like Korean volumes are in fact on the rise.
This graph from cryptocompare.com shows how volumes in Korean Won (blue) have been rather silent since the beginning of the year but have actually opened wide over the last few weeks.
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If we zoom in to the past month, we can see this trend even better. We can also see clearly the spikes in market share that are occurring during the Asian session, which often brings KRW trading to about 50% of the entire market.
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The counter side to this is that unfortunately, Japanese volumes are still on the low burner. Following the hacks on major exchanges over the last few months this is kind of understandable. This type of trust might take some time to recover.
The fact that Japan has now granted the crypto-industry self-regulatory status, could actually go a long way to restoring confidence.
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