“In my experience, I have to say that there was very little critical difference between the net winning traders and the net losing traders in most areas. All of them had good understanding of the basic market fundamentals, used a solid technical analysis or research of some kind, and exercised a lot of personal discipline. The one thing that stood out, the one thing that separated the net winner from the net loser, all things being equal, was that the net winner had a trading plan in addition to his other skills. The net winner knew he was up against not just the market and his competitors, but he was up against himself, too. To guard against the possibility that he (the trader) could blow himself out of the water at any time if he wasn’t careful, that trader had a plan.” – Jason Alan Jankovsky
As we have been discussing on our Twitter Feed, the tape has changed and more and more charts are lining up pointing to more downside across the board. Our base-case scenario hasn’t changed on the equity side > we are still looking for a test of yearly lows. Even if the action has been very choppy, the dynamics have been clear to us all the way from a couple of earnings cycles ago when Netflix first broke. We’ll discuss this in today’s webinar once again, also highlighting the importance of acknowledging a turn in the tape and adjusting to the new flows.
On the commodity side, metals continue to be stuck in the middle of the whole USDCNH debacle and the energy space is being completely dominated by this Crude/NatGas unwind. As always, it’s best not to try and be a hero but it is also important to understand when the traffic light starts to go from Red to Orange and then changes to Green. This will be a key focus of our discussion later on today when we review this in the context of our seasonal trades that are currently in play.
Naturally the DXY remains one of the key pieces of the puzzle and we would suggest to continue to keep an eye on that weekly chart and not get carried away with reading too much into intraday action. The market remains very long USD and despite the fact that we would not be surprised to see more strength, we still continue to believe that it will not be a sustained structural move. We will discuss this more detail in the webinar along with reviewing open swings and other opportunities that are currently setting up.
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