Well it is amazing the difference a few weeks makes – We have been flat out here at Enlightened Stock Trading wrapping up after an EPIC Trader Acceleration Week and so we have not managed to get our global market update done for a few weeks.The markets have moved heavily towards a ‘risk on’ environment in the last few weeks.
As you can see for the indices that I follow closely below, US, ASX and TSX stocks have all rallied strongly in the past few weeks… Hong Kong remains very weak (though sadly we haven’t got many short positions on there any more).
Bitcoin has been motoring up in the last couple of months and has just taken a breather in the last couple of days, however the dip now looks to be over and it has started rallying again.
There are a number of signs that the current trend is strong and broad based. The first is the strength across the entire market. Looking at both the US and the ASX, ALL sectors are up in the last week and almost everything is up in the last 4 weeks (except ASX Utilities).
There is some hope on the inflation/interest rate front too, with US 10-year bond yields falling from their peak of ~5% down to just over 4% this week. Very hopeful indeed – this certainly helps the stock market feel a little less skittish and takes the edge off margin pressures. Let’s hope this trend continues
We have also seen a rapid decline in market volatility with the VIX at levels not seen since pre-Covid in early 2020. This is certainly implying that market participants are feeling confident in the near future.
Of course confidence can lead to complacency and low volatility is generally followed by high volatility, but for now I am taking it as a sign of near term strength
I am really quite partial to small cap stocks, I much prefer trading smaller companies with their bigger long term upside potential compared with the stocks in the S&P 500 or the ASX200. As we have noted in our updates over the last 12 months or so, small caps have really underperformed. However, as you can see in the chart below, we are finally seeing some strength in the small end of town with the Russell 2000 Equally Weighted Index rallying very strongly.
I think it is too early to call the uptrend in small caps just yet, but if we get a break above the highs of late July followed by a higher low after that point then I would say that trend following in small cap stocks is back in the game… … and that is my favorite game to play so I am a looking forward to that
Another sign of strength this week comes from the Crypto markets. Have a look at the performance of the S&P Cryptocurrency Ex-MegaCap index in the table below. Finally we are seeing the Altcoins start to outpace the market leaders (BTC and ETH).
This is HUGE for crypto traders because the rallies in Altcoins tend to be much larger than rallies in Bitcoin and this is where the big money is made in Cryptocurrency trading. We are really looking forward to this next phase of the market strength.
Of course things can change quickly so stay vigilent with your crypto trading, but the biggest lesson for crypto traders in the last year is that if you quit the market and stop trading your systems there can be a huge opportunity cost. Those that have stood on the sidelines until now have missed out on a really nice rally… but it is not too late if you are wondering, I believe there is a lot of upside left in the trend, but don’t wait too long.
If you want to get a portfolio of systems behind you to guide your crypto trading and control your risk, join The Crypto Success System, and let us take all the time and stress out of learning to trade crypto for you (we can have you up and running in as little as a couple of weeks).
Finally the first of our EST Signal Service systems, called Dolphin, has been holding up nicely. After a small drawdown we are back near all time highs.
This system has been a great performer over many years and is super simple to trade given it only trades a single ETF on the US Market. It is a mean reversion system and as you can see from the equity curve below has been very stable over a long period of time.
The long run backtest statistics for Dolphin are:
- Compound annual return 18.6%
- Maximum historical drawdown 23%
- Average profit per trade 2.4%
- Average hold time 4.8 trading days
- % Winning trades 89%
These are pretty great results for a single-instrument mean reversion system that takes about a minute a day to copy!
Even better news, if you want access to a high liquidity, high reliability mean reversion system that takes just a minute a day to follow, you can get a free 30 day trial of Dolphin to see how it works for you
Trading is a lonely sport – too often it is just you and the computer trying to figure things out. I know the challenge of this isolation first hand as when I left the corporate world in 2012 it was just me and my computer for about 6 months before I realised I was bored and depressed and just needed someone to talk to about my trading.
But it was actually worse than that early in my journey!
When I was learning to trade I didn’t have a single person around me who knew anything about trading. Of course there were a few people in the office who bought and sold stocks with little more than but feel and a roll of the dice.
That sort of person is dangerous to have around you because they always want to drag you into their latest hot tip… and there is always someone else to blame!
The power of community was brought home to me this week during our System Builder’s Club meeting (Part of The Trader Success System). As we dissected one of our member’s newest systems and worked together to find ways to improve it. I love these sessions – I get to hear ideas from a bunch of super smart people, provide input from my own experience and help build great trading systems.
So my trading tip of the week is to make sure you don’t try to do everything on your own. Find traders who are successful and work with them and watch how much more enjoyable your trading becomes and how much more momentum you build.
Member of the Week:
My Trader Success System member of the week this week is John H… John joined The Trader Success System after Trader Acceleration week and is absolutely motoring through the program. He is blasting through the course work, asking fantastic questions, showing up, doing the work, participating in the community and supporting other traders in the group.
I am loving my interactions with John and am thrilled with his progress.
Well done John – keep up the great momentum!
News From EST:
Well the dust has settled on Trader Acceleration Week (which we ran from 19-23 November) and here are the final stats:
- 691 Traders registered
- ~80 Traders attended live each day
- 488 Video replay views
- Dozens of awesome feedback emails and comments
- 1 Happy EST Team
We were thrilled with the event and can’t wait for the next live event we do!
Now we are busy working with all of the new members that joined The Trader Success System after the event. Everyone is onboarded and we are having a blast in our live weekly mentoring sessions!
The latest development for EST is the launch of our new Trading Signal Service. This service is specially designed for those who aspire to elevate their trading game without the typical stress and time commitment.
With Dolphin, you receive precise, mean reversion-based trading signals boasting an impressive annual return of 19%, with a high win rate of 90%, and an average trade duration of just 5 days. This means you can confidently diversify your portfolio and achieve the returns you’ve always wanted, even with a busy schedule. The service is tailored to reduce market risk (it is only invested 15% of the time on average) and provides hassle-free trading, with all orders conveniently placed outside market hours. For those eager to transform their trading journey, Dolphin offers a zero-risk trial, allowing you to test the signals free for 30 days.
If this resonates with your trading aspirations, start your journey towards a more prosperous and controlled trading experience by signing up for a free 30-day trial of the Dolphin system here. Remember, you’re only one trading system away from changing your financial future.
On the Home Front:
School holidays are here… so is the Australian summer heat!
The garden is growing like crazy and I am harvesting cherry tomatoes and beans every day. The pumpkins will be ready shortly along with capsicums (Peppers for my US friends) and the herbs have literally gone balistic.
I have a bit of work to do to extend the garden and build greater diversity into our backyard food supply but am really enjoying doing it.
Our kids are having a well earned break after an awesome year of achievements and Stephanie and I are ready to start winding down for the year.
We did have time to get to a business mastermind event on the weekend which was fantastic and really enjoyed the black tie gala dinner last Friday night
Time for me to sign off – It’s Friday night and the weekend is here!
Have a great day – and don’t forget to get your free trial of Dolphin to diversify your portfolio!
Remember – You’re only one system away!
Founder – Enlightened Stock Trading