Welcome to this week’s Enlightened Trader Newsletter. Last Friday was a public holiday and I was busy with the family so didn’t get to write my weekly update. It has been a mixed couple of weeks, but we are seeing some pockets of strength in the markets. Here are some highlights:
US Stocks closed up strongly after consolidating all week, however this rally is driven by the largest stocks because while the S&P500 (capitalisation weighted) is doing well, its equally weighted counterpart is looking much more shaky – see chart below.
The Nasdaq has rallied more strongly, but the rally is not broad based. The Nasdaq 100 Index (which is capitalisation weighted) is being driven by the largest stocks because the equal weighted Nasdaq 100 index is looking much more lackluster.
I am always a bit sceptical of such narrowly based rallies. I tend to think if things were really that great then all stocks would be advancing. So I am not getting too excited just yet.
Australian stocks have had a strong week and my long suffering trend following positions are showing some green and Canadian stocks are also up strongly for the week (see chart below). The Hong Kong market’s rally has failed and it has dropped back below the 200-day EMA. I am on the lookout for further declines and my short system turning on if the drop continues.
Given the constant pressure of inflation, Gold, Bitcoin and the price of your daily Latte are also up strongly… along with the price of everything else that we have to buy. Another good argument for diversification beyond simple buy and hold in stocks. Gold has certainly been a good source of diversification recently!
All in all, there are signs of life and movement in a couple of markets, but no super strong trends are in place just yet… though I am watching gold and Bitcoin closely because they are the strongest of all markets mentioned above.
This is a great illustration of the benefits of international diversification as well as long / short diversification. The more markets you trade and the more diversified your strategies the more likely you are to catch a decent move. That is why in The Trader Success System you get systems for US (long / short), ASX (long / short), Hong Kong (long/short) as well as long systems for TSX, London and several other markets… so if you want to improve your chances of consistent trading results, get access to a globally diversified portfolio of trading systems in The Trader Success System!
Trading Tip of the Week
Patience is probably the most underrated quality for successful trading. Impatient traders are prone to costly knee-jerk and emotional reactions. Warren Buffett has been known to say,
“The stock market is a device for transferring money from the impatient to the patient”
I have seen this time and time again in my own trading psychology… whenever I am patient and calmly wait for the signals to come from my systems I do much better than when I get agitated and act impatiently.
This means to be successful we must:
- Patiently wait for an entry signal when we are on the sidelines
- Patiently wait for an exit signal when our trade is moving against us
- Patiently wait for new equity highs when we are in drawdown
- Patiently wait for the market to pick a direction and start trending again
Traders who lack patience are doomed to suffer immense frustration at the hands of the market… traders who have patience calmly do what they need to do in the knowledge that profits will come if they keep doing the right things.
Student of the Week
I mentioned Eleanor a few weeks back for going live with her first trading system. She is a member of The Trader Success System who is gaining momentum and has her sights set on long term trading success. Well, the momentum is building because Eleanor has already gone live with her second system from The Trader Success System and has her sights set on a third system to add some timeframe diversification to her portfolio. Great progress Eleanor – well done!!!
News from EST
This week we launched The Crypto Automation Engine for Kucoin, so now members of The Crypto Success System can trade our systems (and their daily systems) on full automation for both Binance and Kucoin. We are now going to get to work adding Kraken to our range of exchanges covered!
If you are already a member of The Crypto Success System and you are tired of taking trades manually, save yourself 30 minutes a day and switch to full automation with The Crypto Trade Automation Engine.
On the Home Front
It is school holidays so things are a bit more family focused for us at the moment… though I do have an interesting project going on out in the backyard. I am installing an aquaponics garden which consists of a 1300L pond to grow edible fish and two garden beds. The water from the pond is pumped up into the garden beds and the vegetables use the nutrients from the fish waste to grow and in doing so clean the water for the fish to live.
Once it is all working it will be a fascinating symbiotic sort of relationship where the vegetables grow about 3 times faster than if they were in the ground!
I have traditionally been a bit of a “black thumb” as opposed to my mother who is extremely “green thumbed”, so wish me luck getting all this working!
What about you?
I would love to hear what your biggest trading challenge is right now – comment on this newsletter and let me know what you are working on and if you need any help!
Hope to hear from you soon.
Founder, Enlightened Stock Trading