Welcome to this week’s market update! I am in a writing mood so thought I would share my thoughts with you.

🛑Before you do anything else:

I am speaking at the Trading Mastery 2024 online conference this coming weekend. Register here for free to get access and the recordings!

Have you registered?

Good! Let’s continue…

Everything was much more muted and uniform over the last week compared to the week prior. the Nasdaq and the S&P500 are continuing their relentless grind upwards, so nothing new there.

There was a reasonable bounce in the Chinese and Hong Kong markets in the last week, which is pretty typical for a bear market and is probably nothing to get excited about. My Hong Kong shorts are all pretty close to their profit targets now and today are still showing weakness despite the apparent strength in the market over the last week.

(Is there something wrong with me that I enjoy the short side so much more than the long side – maybe I need to speak to my psychology coach about that 😉)

As you can see in the chart above, the Hang Seng did make a short term higher low on the 5th of February, however the follow through was weak and it collapsed again in the last couple of days. While I will patiently follow my system here, I do expect this higher low to be broken and the move to continue downwards… stops are in place just in case but I don’t get all bullish on a falling market just because there is a rally over a week or so!

🚀Crypto Heating Up!

As you can see from the table above, Crypto is running hot again. Bitcoin is up another 10% for the week and the altcoins are on the way up as well. I still love Crypto for it’s diversification value and the fact that a small portfolio allocation to crypto makes such a big difference in portfolio returns.

Are you interested in learning 9 different backtested trading systems for the crypto markets? Join The Crypto Success System and get your fully diversified and systematic crypto portfolio up and running in less than 3 weeks.

🤔Market Curiosity:

I am looking for some new (left field?) ideas to test… have you been thinking about any trading ideas that you don’t know how to test? If you have and you want me to add them to my research list, comment below and let me know what it is and I’ll give you my thoughts.

📈Trading Tip of The Week:

Trend Following (aka Trend Trading) is psychologically tough, but for those who are patient and willing to stay the course it is a hugely profitable trading strategy… provided you have a good system.

One of the big problems traders frequently have with trend trading is there can be long periods where your positions are moving against you. This can feel like you are just burning money waiting stubbornly for the exit signal…

If you are ever traded a trend following system then you have probably have had thoughts like this:

“Surely I should get now because this stock is not going anywhere and the trend is clearly done. Why should I wait for that stupid trailing stop that is 25% down to get triggered?!?!”

Am I right?

I want to share a chart from my own portfolio today that shows exactly why we need to sit on our hands and wait patiently for our trend following system to give us an exit signal rather than exiting early because we think it is done.

AD8.au looked like a dog just a few days ago. After my breakout entry late last year there was a bit of a rally (Yay 📈) but then the stock dropped from almost $18 to under $15 and it looked DONE.

A twitchy trigger happy trader at this point would certainly be looking for the exits to protect their capital. But look what happened in the last two days!

This is why I always wait for my exit signals and don’t exit prematurely. The system says hold, so I hold. Whenever I have doubts or ideas to improve things I backtest them to see if they make the system better (they rarely do) and then stick to the game plan.

So the lesson this week – when it comes to trend following, sit on your hands until you get an exit signal or you risk missing nice moves like this!

Note this should not be seen as a recommendation to buy this stock – it could turn around and collapse tomorrow – we just don’t know. All I know is if I follow my system rules then I tend to be on the right side of large positive moves and get some nice surprises like this along the way.

🏆Member of the Week:

Our Trader Success System member of the week this week is Frank… Frank has been pursuing some very interesting investigations and come up with a number of great systems using his own analysis, and also building great momentum on testing other people’s ideas, and by asking for help!

Keep up the great progress Frank!

📰News From EST:

There are three things I want to highlight this week…

1️⃣The Trader Acceleration Resource Hub is a FREE resource for YOU which contains 2 ebooks, 4 cheat sheets, 2 trading courses and a bunch of other useful resources. At the moment there are 412 people in the resource hub which means there are THOUSANDS of you that have not taken advantage of this great free resource. No credit card required – Click here to get immediate access. Comment and let me know what you think once you are in.

2️⃣We have just launched The Ultimo Signal Service which is very exciting. The Ultimo Strategy is a short-term seasonal strategy with a mean reversion edge. It trades a universe of US Stock Indices and bonds ETFs. It capitalizes on long standing intra-month seasonal strength and weakness patterns to generate returns that are more reliable than simple mean reversion strategies.

Ultimo generates buy and sell signals after US trading hours have completed, and publishes them for execution the following trading day. All orders can be placed out of market hours so you can trade it from anywhere in the world. Its featured characteristics are a high win rate, a short holding period, and lower market risk than trend-following approaches. The model is an ideal risk diversifier for momentum and trend-following portfolios. Click here if you want to learn more about Ultimo.

3️⃣This Saturday (17th February) I will be presenting at the Online Trading Mastery 2024 Conference. I am presenting on “Overcoming Human Biases with Systematic Strategies”. The event is FREE and there are several other great speakers presenting at the event as well. There are limited spots left so click here to register now and get your free ticket.

If you register you will get access to the recordings, so register now even if you can’t make the whole day so that you can watch the recordings later.

🏠On the Home Front:

On the weekend the kids and I went to see a monster truck show at the local showground. It wasn’t quite Monster Jam (Which Quin and I saw a few years back in Sydney) but it was pretty fun anyway. Here are a couple of pics..

I think these two vehicles probably have the lowest fuel economy imaginable 😂🤣😂🤣 It was a fun afternoon and the kids loved it. Lucky they had ear plugs on on sale because those things are LOUD!

Have a great week 😁📈

Remember – You’re only one system away!

Adrian Reid

Founder – Enlightened Stock Trading