Weekly Market Overview February 21, 2021

In case you missed it, earlier this week I shared a livestream session from the Trading Lab as we went over the current market conditions. If you missed it this Tweet thread breaks down the timestamps of what we talked about. 

The big story, for us at Pollinate right now is Bull Quiet to Bull Volatile regime and we cover that a bunch in this video. But it's dynamic so this weeks email will expand upon the work in that video. 

View Thread

Now on to business!

Is $NQ in Bull Quiet or Bull Volatile? This is what we are working on defining. 

Let's start with the SQN indicator to define it quantitatively, and we did actually flip in and out of Bull Volatile (blue area) last week. 

Bug just as quickly it flipped back into the Bull Quiet regime (green area). 

Next, using price action is a far better way to categorize market regimes as it's more accurate, it just takes more brain power and flexibility to get it figured out.

In the boxed area that I call "Micro Bull Volatile" is what I'm talking about. The daily changes were >1.6% for multiple days, in an uptrend, and selloff days. That is 100% characteristic of Bull Volatile, so we can confirm a short Bull Volatile early, and that then reveals itself in the SQN chart a week later. 

Bull runs end in Bull Volatile regimes, so we need that regime to know that we are getting close to the end, of at least this Bull Quiet campaign. 

Typically end a Bull run with a Bull Volatile top with a couple of key characteristics. 

• >10% move higher since entry into Bull Volatile
• Parabolic top (multiple days higher and a break above the top trend line (vertical)
• 8% or greater down move

In essence suddenly everyone who has been bearish or apprehensive of the rally suddenly capitulates and they start being bullish, some even pay way too much for some options.

At a major top, the bears turn bullish and the bulls are euphoric. 

When the last bear has covered their short and there are no more bulls to buy, that's when it drops and drops quickly.

My take is that we still have a lot more upside to go before bears flip bullish, there is still a lot of caution out there and that means there are a lot of dip buyers to join in the party. 

That being said I added to my long $NQ position on Friday marking the 12th add to my original entry in September. 

I will be looking for the 13,500 (give or take) to hold up next week. Another thing I'll be watching for is any bigger than 1.6% up or down days and more importantly the subsequent responses after. The responses are far more important than the initial moves. 

Foreign Exchange

Current holdings in FX

• GBPCAD
• GBPUSD
• GBPJPY
• AUDNZD
• AUDUSD
• EURJPY

There is one thing in common with all of these positions, they are all trending higher. 

The VBO2 setups fired off on these and I've been adding to all of these positions along the way looking at High Base (bull flag'ish) breakouts, letting them breath as they continue to move in my favor. All stops are above entry, so the trend is set and it is looking good to catch a nice long sustained trend. There will be pullbacks, there will be consolidation but when you catch a good trend early, you can AND should be lazy long.

The only changes here is that I will be looking to cut AUDNZD or add to it, depending on how it trades this coming week.

Crypto

It's hard to find a reason not to love crypto, unless you missed the move and are watching it put in new high after new high. 

With the total market cap of the asset class above $1 Trillion Dollars, up 3X since September 2020, this is a lot harder market to trade unless you have the appropriate strategy. 

In the Trading Lab we have ourselves such a strategy, we got long the summer of 2020 and have continued to just murder this sector all year. 

With the techniques we use from the Systems Mastery Course we've developed a solid strategy to attack the crypto space while keeping risk down. 

It's hard to try and enter a market this strong, I get it, but it helps having a team to help you learn what you don't know you don't even know, faster! Join us in the Trading Lab

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