Salami-crash.. why you always see market first go up and than fall deeper

I see alot of people asking why the market since the beginning of the war alot of times seems to be going up for a while before falling deeper.

The reason for this is how hedge fund algo's trade. There are some that are programmed to always by the dip no matter what after a big fall the day before so that's why you get the impression that markets might recover if you see 1 or more days of green. However than the main hedge fund algo's kick in and those are mostly event-driven. If they know the war in Iran will not be over soon they go back to selling mode and that's why markets than fall deeper. Similar to buy the dip those algo's "sell the rip" if they know the trends is overall downwards.

So next time you see markets go up for a day, don't be fooled by thinking "the bottom is in" if you know the overall trend is downwards. Even if the US and Iran would start talks that still doesn't mean they will come to a peace deal anytime soon. Don't fall into the bear trap.

Personally I have reduced my equity exposure since the beginning of the war and will wait buying until talks show real signs of an actual solution which i expect might take even longer than "just a couple of weeks" like the Trump admin currently is suggesting. Again, don't fall into the bear trap.

**Pro tip:** maybe consider having 5-10% exposure to oil or energy stocks ETFs like $XLE.