Market overview October 12 2020

We made it!

After sending out the Bat Signal warning of a market pullback the end of August in this post a timely email and a bunch of tweets, hopefully you were able to lighten up our long exposure, hedge or even get short and ride that 13% pullback.

As I mentioned in that email/blog we had an 80% chance of a 10% or worse, selloff in the coming weeks. We did, and that’s that.

So far so good, but what we really want to know is, what’s happening from here.

We are firmly back in the grips of the Bull Quiet Market Regime! This is the best, and easiest, regime to make money being long only. If you need to read up on Bull Quiet, here’s a post I did on it. 

In the Trading Lab, we have got long from the lows, with two buys and a third buy the following week after the market broke decidedly bullish.

Now it’s our job to look for reasons to buy, and stay long.

There are many reasons that you might think of why the market shouldn’t go higher and that impending disaster will strike at any moment, but the market doesn’t read the news day to day, the market isn't glued to Facebook all day fighting with your high school friends about masks.

The market is right, regardless of what it should do, price is truth. 

Next, let's have a look at Natty Gas over the last 30 or so years

Natural Gas has "typically" spend a good amount of time bouncing around between $2 and $4. This long term context is helpful in determining how to look at a market. Having the context in place you can look at lower time frames to get a good understanding of what is really happening in a market. 

On the Weekly chart we've had a VBO, a FVBO, a VBO2 and what looks like another VBO. This weekly $NG is a masterclass on trading the Pollinate strategy! 

Now the daily chart of $NG_F, we find it firmly in a Bull Quiet market regime with a potential VBO setting up. That $4 price level doesn't seem too far out of reach and what we know about this one, it can move very far, really quickly. 

Gold has a VBO2 setup on the weekly within a long term trend higher, after consolidating the excess volatility of this summer. The thing about a VBO2 and using position sizing to maximize profits is that you are free from trying to catch a multi-$1,000 move to grow your account.

That’s it for the easy money, let’s have a look at currencies.

This one chart, the $EURUSD chart, is representative of nearly all currencies right now. 

Notice both the daily and weekly are smack dab in the middle of their bollinger bands after a pretty massive run up this summer...after the long grind lower the last few years.

Rather than share all 30 or so currency pairs I trade, the summary is, we are at a place where there is no higher time frame signal giving us any inclination of what's to come. 

Alex Barrow, @MacroOps on Twitter and I did a nice long podcast on this and a number of other markets if you want to go deeper on the subject, in addition to his call on a Democratic Sweep of the Senate and a Biden victory, Real Estate boom has legs and his take on the bull market continuation in equities. 

Finally, I want to share with you the amazing work the crew is doing in the Trading Lab. We are all working together on a massive backtest covering all currencies, major indexes and contracts, ETF's and crypto. 

I'm putting together a NEW Systems Trading Baseline course exclusively for active Trading Lab members. This is a baseline to bring any trader who has knowledge of trading and markets up to a very high level operator through systems trading. 

-2R per month challenge quantified and explained
-The two type of trades and how to think about them when building your own system
-Type 1 a breakout and trend strategy
-Type 2 a failed breakout strategy
-How to get in late in a trend
-The full rule set examples and backtest's of the FVBO VBO VBO2 which you can use as is or use it to help you come up with your own strategy off this framework
-How to structure your hypothesis, how to backtest it, and how to adjust it to improve it, like an AI would
-Full access to the the Lab's backtest 
-Let's talk about the 3 types of leverage and how to use each of them to become wealthy
-Tryout and get funded for prop accounts for massive leverage and very low risk
-Step by step blueprint to getting funded, earning 2R, 3R 4R, then 5R per month
-Additional Q&A's with lab members

This will only be released to active Trading Lab members, this will not be offered separately at this time. 

Join us in the Trading Lab, we have an amazing group of hard working and very intelligent traders working together to help each other become better traders.