Stock Market Update | The Enlightened Trader – China strength, a NEW market to trade, and a trading lesson on fear - Table of Contents

Stock markets had a burst of optimism on Thursday and Friday last week:

  • The US market gapped up on Friday breaking the short term high from the start of the week. Looks like this correction may be over, but be careful of reading too much significance into a single day’s move. I would really like to see this follow through this week to ensure last week’s low holds before I get too excited about the correction being over.
  • The ASX has been solidly range bound for almost 2 weeks now. If the short term breakout in the US market holds, there will likely be a breakout above this range, however there is not a lot of strength in the ASX recently so I am not expecting any spectacular moves in the near future.
  • Hong Kong and the Chinese markets especially are showing real strength at the moment.  True to form once the Kong Kong market picks a direction it can move very sharply. Our long positions are doing nicely this week and all shorts are closed.
Stock market

China and Hong Kong are standout performers and since they have been in a down market for many months (see chart of Hang Seng index below), this could certainly be the start of a new uptrend. Of course the Hong Kong market is quite volatile and prone to sudden breakouts, so I wouldn’t go betting the house on it. There have also been several other times during the bear market since 2018 where it looked as though the move was done and the market was going to go up… for now I am long HK stocks and don’t have any shorts on. I am watching with interest what happens next

China and hongkong

You can see in the table below that there has been no real strength in the stock markets across North America and Europe in the last week. China and Hong Kong are standout performers.

I noticed this week that it is now possible to trade Taiwan stocks through Interactive Brokers. I am a bit slow on the uptake here (duh) because a quick google showed me that this was announced in July last year… never the less this is fantastic because I have a number of trading systems that work quite well on the Taiwanese stock market but I have never had the ability to trade them.

Taking your existing systems and testing them on other markets is a very easy way to build diversification into your portfolio quickly. If you have some good systems for one market, chances are they will work in some other markets as well.

If you want to backtest your trading systems on ASX, US or TSX (Canada) then I recommend using Norgate data combined with Amibroker / Realtest / Wealth-Lab.

If you want to backtest your trading systems on any of the other markets below then I recommend using Metastock data.


SIDE NOTE: I have had a lot of people ask me how I am producing these awesome dashboards of stock market performance. I use the XLQ addin for Excel which allows me to pull a wide range of stock / index / commodity / forex and other financial data into Excel. The cool thing is it can pull data from Norgate Data into Excel(which is what I have used for the table above) , Yahoo and a variety of other sources into Excel too. It is hugely useful for tracking your positions, open trade profits and a range of other reporting functions that traders need to do. Check out XLQ here and get a $50 discount.

The correction in the Crypto markets continued this week despite the late rally. I will stress again that this is very normal behaviour and if you zoom out and look at the chart below we are still well and truly in bull market territory.

Most of my long positions are closed now but I haven’t yet gone short crypto. I don’t like to predict what will happen, however we might have another leg down before we get a decent rally so just be prepared for that in case. At the moment Bitcoin is trading at the top of the down sloping channel, so it is possible there could be a breakout but I am not holding my breath for that just yet.

The next medium term upswing in Crypto (when it comes) should be extremely profitable if it is anything like what we saw from November 2023 – March 2024, so it will be worth patiently waiting for.


Your Trading Psychology

Have you ever felt that knot of fear in your stomach when you had to place a trade? or when you were holding onto a trade waiting for an exit signal?

Fear manifests in trading primarily because of the markets’ inherent uncertainty. This fear can emerge at several key moments: when entering a trade, during its lifespan, and when exiting the trade.

Firstly, the fear of hitting the buy button, or initiating a trade, often stems from a lack of confidence in one’s trading rules or the anxiety over the outcome of that specific trade. It’s crucial to have a well-tested trading system to mitigate this fear by providing clear signals and rules that you trust.

During the trade, fear can fluctuate with the price movements. If a trade is profitable, you might fear losing those gains and be tempted to exit too early. Conversely, if the trade goes against you, the fear of realising a loss might prevent you from cutting losses at the predetermined exit point. This is where disciplined risk management strategies and predefined stop-loss orders become invaluable.

Finally, when exiting a trade, whether for a gain or a loss, fear can cloud judgment. Questions like “Am I making the right decision?” or “What if I miss out on further profits?” can lead to hesitation. Here, it’s essential to follow your exit rules strictly to overcome emotional responses.

To effectively manage these fears, focus on the process of trading rather than the outcomes of individual trades. Develop a trading plan that includes not just entry and exit strategies but also methods for emotional regulation, such as mindfulness and detachment from the outcome of each trade. By focusing on executing your trading plan consistently and viewing trading as a long-term endeavour, you can reduce the emotional weight of individual trades and improve your decision-making under pressure.

Remember, the key to managing fear in trading is not to eliminate it but to understand and channel it effectively. This approach not only preserves your capital but also turns fear into a tool that ensures vigilance and respect for the market’s risks.

Member Wins

This week our member of the week is Kazuko, who has been in The Trader Success System for a while now but has had some personal challenges which took her away from trading for a while, however this last week Kazuko is back with huge energy and focus and doing extremely well.

I love seeing our members energised like this and asking fantastic questions. Kazuko puts in the work, seeks clarity when she doesn’t understand something and asks great questions.

Keep up the energy and momentum Kazuko – it is fantastic to watch!

News from EST

What I am doing with my AI Clone continues to blow my mind! I can’t wait to share more about this publicly. I still have some work to do before it is ready for prime time, but it is pretty awesome already!

We have a fantastic group who have commenced the Crypto Mastery Program with us starting this week. Unfortunately this program is now closed so I am sorry if you missed out. Our group is looking forward to implementing a fully automated portfolio of crypto trading systems in the next 6 weeks!

On the Home Front

Some times you have to notice the small wins in life… this week while I was at the beach with Stephanie I had the best iced chocolate I have ever had in my life. I can’t tell you how good it tasted – it was just ridiculous.

Maybe it was that I was in a really good mental state when we went to our favourite cafe, maybe it was that the manager greeted us by name (we spend a lot of time there), maybe it was the brief moment of sun in an otherwise rainy week, or maybe it was just seriously the best iced chocolate ever made.

Remember to enjoy the little things… you don’t need to leave happiness on hold until you have $1M in your trading account. Happiness is something that we can choose simply by appreciating more of the little things in our lives.

The more you consciously find to appreciate the more happiness you will feel.

Happiness was as simple as appreciating an iced chocolate at the beach this week for me… what was it for you?

Remember – You’re only one trading system away!

Adrian Reid

Founder – Enlightened Stock Trading

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