I believe we have seen the high until we know who is in the White House for the next term. As I write this Thursday night’s move highlighted why I have been cautious leading into September and being an election year with polar opposite candidates for the US election, the run into the November could be a graveyard for traders.

From being one of the most aggressive bulls in April I have moved to much more cautionary stance on financial markets as there are notable signals that suggest a steep and aggressive pullback could be in the offing.

Once markets peaked in June 2009 there was little direction for a couple of months before resuming the uptrend. Expect the same here again. It may not take as long to get going again as the actions by the Fed and Governments is far greater now than in 2009. Basis this not only could the pause be shorter but most likely the resuming rally will be even more robust.

This past week has been a strong one for many individual stocks and for broader indices, but now we are at some very key levels and I am genuinely struggling as I write this on a Friday to find anything that I can say “today is a great time to buy”.

I am not stupid enough (or at least I don’t think I am) to be a blind bull. The risk of a second wave of Covid-19 shutting down the economy again after being re-opened is a risk. But the question is where could equity markets be by the time that occurs, if it ever does?

After many nights of watching CNBC interviews, days of reading analyst reports and wasted time on social media I have somehow heard almost everyone’s opinions on the world. I have come to the conclusion that there are generally three main categories that investors sit within based on their views of the future and how the world plays out.

Maximizing the best return possible from the volatility is not only understanding (and reacting) to what is currently happening with headline news, but also formulating a view of what post-Covid-19 will look like and how to be best positioned for it.

I have returned from a trip to the USA to find equity markets in turmoil. The bond markets had been warning of this turmoil since late January as I highlighted in late January in my ShareCafe article. The question now begs is it time to wade back into the market?

As markets approach this end of January period (like in 2018), the question becomes how justified are equity valuations at these levels. Can the US reporting season not only justify the current valuations but also provide scope for further gains – and immediately? I find it very difficult to see that to be the case.

One of the hardest things for a trader to identify and admit is overtrading. Overtrading is almost always associated with the emotion of desperation. Like panicking, desperation has the same effect on the brain, stifling the ability to make clear, sound and calculated judgements.

I named it the easiest trade of the year (as I explained) because there would be very little volatility in bonds with little count-trend surprises so it would almost be a “set and forget” trade.

Despite a steep drop this week, indicators are not yet at oversold levels. Nor has there been enough ‘panic and fear’ that accompanies market lows. To me this spells, along with chart patterns, that there is still more selling to come.

While many stocks can seem overvalued and stretched in their price rallies, the real corrections typically come when there is a combination of extreme valuations and robust competition forming. This is when even the leaders begin to suffer.

I am beginning to cement my view that without some rapid resolution to the trade war, markets are vulnerable to a Federal Reserve that is clearly behind the curve.

The bull market experienced in the US stock market is the longest in history and with all the developments occurring globally from the trade war, to missile tests, to Middle Eastern tension and currency manipulation – what do I watch, for signs of a market top or a correction?