The last couple of weeks have been interesting to say the least and not in a good way.
We have had war tension, oil moving but not really confirming anything, gold wobbling when it should be stronger, and Bitcoin quietly doing something quite important in the background. It has not been a clean environment. In fact, it has been the opposite. Confused, fragmented, uneasy.
That matters, because when markets are clear you can follow trends. When they are not, you have to change how you think.
I sold my gold equities.
That was not because I suddenly think gold is finished or that it cannot go higher. It was much simpler than that. The trade felt mature. It felt crowded. The easy part of the move looked like it had already happened.
There is a difference between being right and having an edge. You can still be right about gold long term and have no edge in the trade today. That is what the ‘feels’ were for me.
So I stepped back.
Of course oil is good in these circumstances but Brent is not $200 and WTI has not smashed through $100 and aheaded for the moon. The stock have been great and for the ultra focused special opportunities link Equinor, north sea oil exposure and no Middle East issues, has been particularly good.
I’ve not moved into cash in a dramatic way, not into some big new position, just into something more useful, I’ve just increased my optionality. The ability to watch without being forced to act.
That is not a passive state. It is actually quite active, because when you stop trying to predict what should happen, you start seeing what is actually happening.
One of the things I have been watching closely is Bitcoin. I have a simple framework in my head. Gold is for war, Bitcoin is for flight. When people get nervous in a certain way, Bitcoin tends to move first. Its when elements start thinking about fleeing, then Bitcoin moves in a spike.
We saw that recently. Bitcoin moved, and it moved before oil really reacted. That caught my attention. It suggested that some part of the market was getting uncomfortable before the obvious assets showed it.
So I took an oil position, made some money, and got out. I could have made more if I had held it, but that is not really the point. The point is that the signal was there, and it worked.
That is where I have shifted my thinking.
Less about what the story is, more about where the signals are coming from.
The bigger shift though has been around how I look at equities, especially on volatile days.
Most people look at a crash and see loss. Red screens, panic, confusion. I used to do that as well. Now I look at a crash and I see something else.
I see positioning.
Modern markets are dominated by long short funds. They are not really trying to predict the direction of the market. They are trying to exploit differences between companies. They go long what they think is strong, and short what they think is weak.
In theory that means they are hedged. In practice it means the market is full of hidden pair trades.
On a normal day you do not really see this clearly. Everything moves together, and the structure is buried.
On a crash day, it becomes obvious.
The stocks that everyone is long of tend to fall harder than you would expect. The ones that are heavily shorted rise, not because they are good, but because people are closing positions. A crummy stock that rises on a bad day is a surprise, but only if you don’t know why.
It is like the tide going out. You suddenly see where everything once hidden actually lies.
That is useful.
Because once the panic passes, the machine starts again. The same longs get bought, the same shorts get pressed, and the same trends resume.
But now you know where the pressure is.
You know which stocks are crowded, and which ones are being leaned on.
That gives you options.
If you are inclined to go with the flow, you can follow those trends. The strong tend to keep going up, the weak tend to keep grinding down.
I am more interested in the other side of it.
Sometimes a stock is heavily shorted not because it is fundamentally broken, but because it is simply the weakest in a group. That is a very different thing.
If that pressure ever lifts, even slightly, there is no natural seller left. That is when you get those sharp upward moves that seem to come from nowhere.
I like to watch for that.
I am not jumping in immediately, and I am certainly not trying to catch falling knives. I am watching for a change in behaviour. When something stops going down and starts going sideways, when the selling pressure dries up, that is when it gets interesting.
That is where the asymmetry is.
What has changed for me over the last couple of weeks is not just what I own, it is how I am looking at the market.
I am less interested in narratives. There is always a narrative, and it is usually wrong at the point it feels most convincing.
I am more interested in flows. Who is long, who is short, who is being forced to act, and where that pressure might go next.
It is a quieter way of thinking, but it is useful.
Right now the market does not have a single clear story. It is fragmented, and that usually means opportunity, but only if you are not overcommitted.
So I am not trying to be a hero. I am not trying to predict the next big move.
I am watching, waiting, and when something obvious appears in the flow, I will act.
That may not sound exciting, but in my experience it is how you stay in the game long enough to catch the moments that matter.
If you can stop reacting to the noise and start reading the structure underneath, the market becomes a very different place.
And on days when everything looks like it is falling apart, that is often when it is telling you the most. You can bank that information for later and after the short term situation resolves you have a list of prospects to watch for signs of things to come.