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Mid Month Update – June

So far, June is playing out well. We are steadily increasing profits due to the new FX strategies and being patient when it comes to closing the shorts in NASDAQ. The NASDAQ situation, however, is very interesting. Therefore, to ensure all investors understand the situation, we wanted to explain our thoughts on the US Markets, how this affects many investment funds and traders, and what protocols Novus Black has to ensure profitability.

You only need to visit any financial website, and you will see that S&P500 and Nasdaq are in an unprecedented six-day rally. Due to this, many funds are shorting the market, waiting for the inevitable crash, and Novus Black shares the same sentiment. Due to this, we are concentrating our daily efforts towards the FX market, where we continue to add profit to the board each day while we sit and wait for the inevitable decline of NASDAQ.

The consensus at Novus Black is the same as many companies: waiting for the economic recession to hit the US, therefore dragging stocks down. But despite a series of major bank failures at the start of the year, the American economy seems to be growing.

The S&P 500 index, which measures the performance of the top US blue-chip stocks and sets the tone for investors around the world, has climbed more than 14 per cent this year, which is, in the eyes of many professional funds, inaccurate, overbought and over-inflated.

At first glance, it would seem the market is strong, and therefore how can we expect a Nasdaq crash? But look closer, and you will see that this rally is underpinned by some very slender stilts. If you strip out a very small bunch of companies from the Nasdaq, all of which are heavy tech hitters like Apple. Tesla, Google and Amazon, you will see that the market is massively inflated and actually is not going anywhere.

“Typically with things like this, when only a small number of stocks are doing well, you get overvaluation and speculative behaviour — everyone pumps money into these stocks, and we have another tech bubble like we did in the late 90s and early 2000s,” says Remi Olu-Pitan, multi-asset portfolio manager at Schrod

So based on technicals and statements from the most well-respected analysts in the world, the NASDAQ pump is attributed to the Big 7 tech companies, which certainly gives an odd impression of market health. Whilst the Big 7 tech companies continue to overinflate the market, the rest of the S&P500 is terrible. The produced an excellent graph to illustrate what is happening.

As you can see, without the Big 7 heavy hitters, the market performance this year has been very underwhelming. And this brings me back to the point earlier: the NASDAQ looks strong, but looking closer, it reveals that this rally is underpinned by some very slender stilts, the Big 7 tech companies.

We currently hold heavy positions in NASDAQ, and due to high levels of P&L and adhering to risk management procedures, we have to be patient and wait for the situation to play out. Whilst the US Market madness continues, we will, as mentioned, trade our FX portfolio, ensuring consistent profits are added to the board for June and hopefully giving all investors a positive outcome to the month.

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