Weekly Market Overview January 31, 2020

Whew, markets have been rather interesting lately. I won't recap the whole /r/WallStreetBets subreddit shenanigans, but I assume this Twitter Poll I did on Sunday doesn't need much explanation.

As of the time of this writing Silver futures haven't opened, but other Silver trading markets are trading near +18% since Fridays close, on FTX platform, trading over $30.

In the Trading Lab we are already well positioned for this trade, as members of the lab also have access to the Monthly Macro Strategy. 

In the Macro Strategy we got long the beginning of January $SLV at $24.84

Additionally on Wednesday of last week, we put on a $SLV deep out of the money (DOTM) call position on $SLV buying the July 16, 2020 $34 Calls for $0.50 per contract. 

As of Friday that position was at $1.89 per contract for a gain of +278% in two days. There still is plenty of room in this trade to move higher and we are really well positioned going in to this potential #silversqueeze

Also in the Trading Lab I went deep on the DOTM call strategy this week in the Livestreams. You should really check it out, join us and move from Middle Skill to High Skill trader, where the real money is made in this business.

Yes that is a hashtag that has been trending all weekend long on Twitter as the WSB crew seems to be joining forces with the crankiest of the smug Twitter folks, the doomsday'ers!

I for one didn't see that coming.

It's almost as if we are seeing the transition of the WSB crew moving from Low Skill (highly profitable) traders to Middle Skill (least profitable) traders as ZeroHedge, Peter Schiff and maybe even Sven align forces with WSB to transfer all these massive retail profits back to the Hedge Fund overlords.

Personally I hope the WSB crowd stays Low Skill trader cohort. Low Skilled Traders make so much more money than Middle Skilled traders and they can keep running circles around everyone without getting caught up in pedigree, spellcheck or any other useless metric to guage intelligence. 

As they claim "They can stay retarded a lot longer than you can stay solvent!"

Let's get to work!

$NQ $NDX $QQQ 

I've been talking a lot recently about NQ futures just beginning a Bull Quiet regime and how a Bull Volatile regime has at least a 10% move higher before a major market top. 

https://twitter.com/ChrisDMacro/status/1351997708769234944

While SQN indicator is great to keep track of the big picture, I use price action on a daily basis to understand what's really happening. With the benefit of 15+ years of manual backtesting I've learned to identify characteristics of market regimes, not relying on indicators to tell me what's happening. 

Last week $NQ was in a Micro Bear Volatile regime, based on price action. You can see this with the two big down days Wednesday and Friday, you can also see this by how quickly the SQN jumped from .55 on Monday to 1.29 on Thursday. You don't need to be a statistician to know that this is a quick jump in volatility. 

But what also should stick out to you is that pullbacks like last week happen, they suck in bears who take yet another short attempt, while scared bulls go to cash. 

This leaves a big pile of buyers on the sidelines, as unobvious as that might seem. 

Bears will have to buy to cover when their stops get taken out, and sideline bulls will FOMO in to chase prices higher. 

The same story, it doesn't change...until we finally hit Bull Volatile, then we get a correction and reset again. 

Unless something changes, I'm still long for months now, and looking to add again this coming week. 

$SLV/$SI 

Silver has a measured move target up to $34 but what's interesting is that the SQN is still in Neutral territory

$SI/$SLV trades in bullish regimes 84.57% of the time, so a move up to $34 measured move price would flip $SLV into a bull quiet regime. Remember major market tops usually don't happen until Bull Volatile regime with a minimum 8% selloff (sometimes plenty more). 

This expels most of the reasonable and logical ways to trade this one and why I put on the option trade last week. 

Then we hand it over to the Macro Strategy which spends 4 or more years in winning positions, and we see the next measured move higher at $86 per ounce. 

With all of this, we already have some great potential outcomes with potentials to be wildly successful over the next few months to next few years. 

Then WSB moved their attention to Silver and the "banksters", which has nothing to do with the trade I put on. However it could very well play out like the Twitter pole I posted above suggests with $SI hitting $500 per ounce. Also considering the consequences of that outcome for inflation and the aforementioned "banksters", the very real likelihood that this trade gets stopped out.

$GBP

The British Pound is in a very nice trend on most pairs. For our prop traders trying out or already funded we are using the End of Day swing trades, FVBO/VBO/VBO2 and we are long $GBPJPY 

There is a lot of carry over to all of the GBP pairs but this one seems to have the best trend so far and that made it a great candidate for the VBO2 setup.

The GBP pairs are also setting up for a nice long term trade in the Monthly Macro Strategy, where we will be able to get setup for a multi year move on this pair. Remember the Macro Strategy is included in your lab membership or you can purchase on its own for $100 less per month here