“As the bull market goes on, people who take great risks achieve great rewards, seemingly without punishment. It’s like crime without punishment or sex without sin.” – Ron Chernow
NQ
If you missed out latest thinking, you can always catch up on it > HERE.
EOW Update
“Stock market bubbles don’t grow out of thin air. They have a solid basis in reality — but reality as distorted by a misconception. Under normal conditions misconceptions are self-correcting, and the markets tend toward some kind of equilibrium. Occasionally, a misconception is reinforced by a trend prevailing in reality, and that is when a boom-bust process gets under way. Eventually the gap between reality and its false interpretation becomes unsustainable, and the bubble bursts.” – George Soros
No change to our recent discussions and bigger picture outlook. As we discussed yesterday, we have to be patient and let things play out especially post FOMC as we know that markets like to wait 24/48h before picking a direction.
Apart from the continued focus on how the indices react around our key bull/bear lines and the 200DMAs, today’s close will give us another important piece of information though the weekly candle closes.
Remember that we have a whole host of FOMC Members and Draghi speaking today so, on top of the usual US/CHina + Brexit headline risk, we will have to deal with the CBs too.
ICYMI, Here is our update charts/thread from yesterday > read on Twitter and please read up on the upcoming addition to the 50 on Markets Video Service.
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Wishing you a great day ahead.
Weekly Closes
“Primary trading paradox: In what way does a trader have to learn how to be rigid and flexible at the same time? The answer is: We have to be rigid in our rules and flexible in our expectations. In this way we gain a sense of self-trust that can, and will always, protect us in an environment that has few , if any, boundaries.” – Mark Douglas
Moving along from the post SOTU update and yesterday’s post, our attention will now turn to the weekly closes. Once again, despite continued event risk, FED risk and forward guidance risk; markets continue to be extremely complacent across the board. As usual, nobody has a crystal ball but it really does seem that we are getting more and more tells and that a bigger move is brewing under the surface.
If you are interested in a more structured way of tackling the business of trading, attending a live daily morning call or a more detailed discussion on the charts we post / trade ideas, don’t hesitate to check out our Premium content.
Wishing you a great weekend ahead.
Chart of the Day
“The typical trader will do most anything to avoid creating definition and rules because he does not want to take responsibility for the results of his trading. If he knows exactly what he is going to do and under what conditions, then he would have something by which to measure his performance, thus making himself accountable to himself. This is exactly what most traders don’t want to do, preferring instead to keep their relationship with the market somewhat mysterious. This creates a real psychological paradox for traders, because the only way to learn how to trade effectively is to make oneself accountable by creating structure: but, with accountability comes responsibility.” – Mark Douglas
Today we will be focusing on the NQ and action in FANG components. AS we discussed yesterday, there are quite a few interesting dynamics currently in play across the board.
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Wishing you a great day ahead.
Early Morning Update
“Strength does not come from winning. Your struggles develop your strengths. When you go through hardships and decide not to surrender, that is strength.” – Arnold Schwarzenegger
As we discussed, there was absolutely no sign of fear in the markets and expected recent lows to be taken out and we are still focused on unfinished business at yearly lows. Once again, the pivotal bull/bear lines proved to be extremely useful in assisting us and we will continue to focus on them. Naturally we would never play for any market to move in a straight line and even if we get a flush and tradeable bounce, those levels will remain our key strategic guides. Primary downside targets are still 4-6% away on most of the indices for these current moves.
We also continue to expect both Nikkei and USDJPY to catch up to recent moves and expect to see plenty of two-way trading opportunity inside these ranges on the way to the bottom-end supports.
The other key chart going into this week, ECB and the upcoming FOMC meeting will be the DXY. We would be very cautious about trying to be aggressive trying to fade ans sustained move and continue to focus on EURUSD. Don’t forget to properly understand Euro weight in this and remember that in an aggressive risk-off environment, especially in the context of China frictions, AUssie and Kiwi will struggle. No change in our base-case outlook.
If you are interested in a more structured way of tackling the business of trading, attending a live daily morning call or a more detailed discussion on the charts we post / trade ideas, don’t hesitate to check out our Premium content.
Wishing you all a great day and week ahead.
Into NFP
markets managed another miraculous squeeze following yet another host of old headlines but still closed below the key pivotal bull/bear lines. We remain very suspicious of this action and are not seeing this as another key low that will trigger the famous santa rally for a move back into all time highs.
Naturally, especially into NFP, we still see a possible attempt to squeeze these back into proper gap fills but the real focus will be on how we close the day/week and not on intraday shenanigans. Both complacency and headline risks remains very high and we would not be fans on risk-on o/n holds.
The main key chart for NFp will be the dxy. We are still hovering around the 97 mark and unless we see a proper close above 98 of below 96 we will likely continue to see very choppy trading. As already discussed, this is the key piece of the puzzle and we will review our outlook and implications in today’s webinar session.
Remember that even if the usual suspects have been talking about capitulation and reversal, we have see zero panic in the markets. From current levels, unless you see the VIX trading above 30 but really, into the 35s and 40s, this is still pretty much a ‘nothing burger’.
If you are interested in a more structured way of tackling the business of trading, attending a live daily morning call or a more detailed discussion on the charts we post / trade ideas, don’t hesitate to check out our Premium content.
Early Morning Update
“What we can or cannot do, what we consider possible or impossible is rarely a function of our true capability. It is more likely a function of our beliefs about who we are.” – Anthony Robbins
Most gaps from the Sunday euphoria are done. As discussed in yesterday’s webinar, you have to be suspicious when every talking head, pundit and punter is absolutely certain of any given outcome. As a general rule, we have and will continue to fade these situations.
Our main focus remains on price and on how markets react are specific levels. Remember that this week will likely prove to be pivotal in setting the tone for action into year end.
Here are some of the charts we will be updating and discussing today (charts can be loaded by clicking on the bullet title):
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Nikkei and USDJPY breakdown, range and inflection point.
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Bigger picture Bull/Bear lines in ES/NQ/YM/RTY.
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GOLD $ DXY.
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EURUSD 1.13 rotation + seasonal pattern.
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ZB cyclical support inside chop zone.
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SPX still in range.
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NDX key inflection point.
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Crude, the 200WMA and waiting for OPEC.
If you missed our latest update heading into this weekend and our discussion focusing on the possible repercussions on equities and the dxy, you can watch the recording > HERE.
Note for active 50Scouts members: *make sure you read out latest update* and keep an eye on your inbox for a free pass to Friday’s daily webinar session (make sure to check your spam folder too).
If you are interested in a more structured way of tackling the business of trading, attending a live daily morning call or a more detailed discussion on the charts we post / trade ideas, don’t hesitate to check out our Premium content.
Wishing you a great day ahead
Charts of the Day
“In many ways, large profits are even more insidious than large losses in terms of emotional destabilization. I think it’s important not to be emotionally attached to large profits. I’ve certainly made some of my worst trades after long periods of winning. When you’re on a big winning streak, there’s a temptation to think that you’re doing something special, which will allow you to continue to propel yourself upward. You start to think that you can afford to make shoddy decisions. You can imagine what happens next. As a general rule, losses make you strong and profits make you weak.” – William Eckhardt
No big change from our Latest Weekly Outlook Video. The focus remains on headline risk and what will come out of the G20 this weekend. Nothing else matter short-term…
Here are some of the key charts to keep an eye on:
If you are interested in a more structured way of tackling the business of trading, attending a live daily morning call or a more detailed discussion on the charts we post / trade ideas, don’t hesitate to check out our Premium content.
Wishing you a great day ahead.
Charts of the Day
“Fill your bowl to the brim and it will spill. Keep sharpening your knife and it will blunt. Chase after money and security and your heart will never unclench. Care about people’s approval and you will be their prisoner. Do your work, then step back. The only path to serenity.” – Lao Tzu
If you missed it, you can take a look at our > Latest Weekly Outlook Video.
Here are some of the charts we will be reviewing and discussing today:
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Crude still under pressure and into KEY support > CL_F Daily
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Dollar still looking for direction into this sloppy resistance zone > DXY Weekly
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Germany still not looking pretty. Swing in play and we have now given back 2 years of free money stimulus > DAX Weekly
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As discussed Tech broke back in July with Netflix and the repricing is in play > NQ_F Daily
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The Generals did a very good job at paving the way to the upside, so it’s only natural that they do the same to the downside > FANG Daily
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Still stuck inside the yearly range and no change in outlook; we expect yearly lows to be revisited > SPX Daily
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As we have been discussing since 2017, Junk is really painting an ugly picture. ignore at your own peril > JNK Weekly