The general perception injected into the market started as recession pressure, but it is not like that. It started with the story of the carry trades that started with the interest rate hike in Japan on Friday and opened with negatives of up to 12-14% in Japan on Monday. In fact, in my opinion, the trigger for the trouble was not the recession, but the carry trade in Japan, then the recession in America and the pressure on technology stocks, and it is not talked about much after that, but actually, for me, what is even more important than these two items I have listed is that the markets still cannot predict the extent of the retaliation by Hamas or Iran. But I think there was no movement in gold in that pricing. Many international analysts or international relations strategists say this. They say we do not expect Iran to react very seriously, because Iran has such a character.
But on the other hand, flights to Lebanon were postponed. If you consider that many countries have called their citizens back, etc., the extent of the retaliation there is unknown. I think this is making the markets nervous. Now if you ask me to rank the movement that occurred from Friday to Tuesday in order of importance, I would put Japan, uncertainty of retaliation and recession in third place. While S&P was at 3600, people were made to sell goods in America with recession pressure by giving 20%-25% down targets to American stock exchanges. When many stocks in America reached the Fibonacci 1.618 gold ratio, recession was started to be discussed. When certain dynamics, certain formations or target areas are completed, correction starts and there are always excuses for those corrections in the market.
For American stock exchanges, especially for Nasdaq, this decline from 20,600 to 17,000 will make such piston-like movements in a zigzag region for a while. In other words, this decline will not immediately rise in a v shape, I expect a w-shaped return here. I expect a return like we will kick, give it back, seek approval, and rise again. Therefore, in this chart, I expect Nasdaq to return to 20,000s with short right legs, not a V turn, in a technical sense. If I come to the psychological side, Monday's sale was definitely not a crisis for me. I will try to explain by separating technical and psychological. I would not say that we will not see the lowest lows we saw again. Because there is still uncertainty and a retaliation risk that bothers me a lot is still on the sidelines. Recession risk, many analysts in many reports yesterday and today, they do not see recession risk like me, at least for now. FED also does not see recession risk relatively.
Therefore, I think that the main dynamic of Friday and Monday's sale is not recession but carry trade, and although certain risks continue, I think this decline is an opportunity without leverage, without debt and by accepting the carrying cost. In other words, Monday's decline was not a crisis or chaos, but an opportunity depending on the if conditions I mentioned in quotation marks. If you ask whether this opportunity, that is, the bottom we saw on Monday, is it possible that it will not be below the rate, I would not say such a thing. Because technical analysis gives probabilities, it does not say for sure, it includes every risk.
One of the indicators we look at the most in crises is the volatility indicator VIX. I would say for Wix, if it stays above 20-21, things may get messy, take your guard. If you pay attention to S&P when VIX peaked in 2016, it feels a correction, a discomfort. Then the decline remains an opportunity, then the uptrend begins. VIX peaks until its maximum deviation between 2017-2018. There is fear and chaos. There was a 10% - 20% correction in S&P during this period. As a result, the graph says that this fear was an opportunity, and immediately a few months later, American stock markets are going to a new peak. At the beginning of the pandemic, VIX volatility was 60% more intense than it had been before, we experienced a pandemic. In other words, we experienced something that has not been experienced for a long time. There is no more decline, there has been an opportunity in the US stock markets, even the pandemic has become an opportunity.
This week, with the carry trade, recession story we experienced, there is a peak in the VIX, a 10% - 12% drop in the S&P from 5600 to 5000. As a result, the price may be pressured. They may want to shake the market with recession concerns. Because it is the rule of the market. After every peak of the VIX, the market has somehow converged towards the average. It returns to every price trend and moving average. This is a risk. In other words, we do not know the extent of the retaliation. There may be a retaliation that could lead us to World War III. Even if such a thing happens, it will remain an opportunity. Because capital markets are markets that always tend to go up. Although there have been short and - or medium-term downtrends from time to time, this has always remained an opportunity in the big picture.
Today and - or from now on, risks may occur, crisis sometimes equals opportunity. Investors should never forget this. Only here, what I strongly ask investors to pay attention to is that if you are buying it as an opportunity when a price drops, you will pay attention to two things. You will not buy it with money that can affect your life, but with two debts and loans. You will buy a product considering it has become cheaper.
The information, comments and recommendations contained herein are not within the scope of investment consultancy. Investment consultancy services are provided within the framework of the investment consultancy agreement to be signed between brokerage firms, portfolio management companies, banks that do not accept deposits and customers. The comments in this article are only my personal comments and these comments may not be appropriate for your financial situation and risk return. For this reason, investments should not be made based on the information and comments in my articles.
