Following a tense week of global political worries, Brexit shenanigans and tariff wars, markets are solidly in a risk-off mode going into the weekend. But risk on or risk off, UK Index is always in a trade-on mode and there are solid bargains to grab even when markets are on the defensive.

A typical, some would even say knee-jerk, reaction to market risk has always been to, basically, switch away to safer security classes. Some people still prefer to remain faithful to the equities market and move into defensive stocks such as Unilever, Reckitt Benckiser or Diageo, the stable consumer staples. Others go a step further and invest in safe havens such as gold or even the supposedly risk-free US 10-year T-notes.

But these are purely defensive, reactive moves designed to protect the investor from the “come what may” headwinds. They don’t give investors many opportunities for smart, proactive deals. In my opinion, instead of turtling up and following standardised prescriptions, now could be a great time to look at bargain stocks that are poised for potentially profitable rebounds.

I am talking about bargain bin shares that may have been on a downtrend, but recently hit a key support level, like BT. Or stocks that have been trading in a range, pressured by the negative momentum on UK Index , but ready to bounce off support for a leg higher, like Morrison’s or Standard Chartered or Standard Life Aberdeen.

Look at these lovely ranges on easyJet and think of all the tradable opportunities you see before you as the shares bounce off from the top of the range to the bottom. Markets may be on the downtrend, but it doesn’t mean that you must go into Short selling. A great proactive move when the risk-off mood hits the UK Index is to wait for the shares to reach the bottom of the range and go Long back to the top.

Remember, risk appetite might be low today, but there are fundamental forces in play here that will outlive current political tensions, meaning that these support and resistance levels are perfectly valid. Here’s another example (Whitbread) that demonstrates a great opportunity to buy at the bottom of a short-term downtrend and ride the rebound back to May highs.

I could go on and on, but there is so much potential out there even in current risk-off mood, that it would take too long to list everything (OK, just off the top of my head, have a look at Direct Line Insurance, Informa or Schroders).

I’d love to share more of these insights, so if you are interested in taking advantage of some of these investment opportunities, get in touch with me and join our community of investors by signing up for our Research and Trade ideas.

James Matthewson, Trader at Accendo Markets, 8 June 2018