Stock Market Update | Market performance drivers, 57 equity Curves and a useful trading psychology tip

Global Stock Market Update – 25 June 2024

The chart below tells a lot of the story right now…

• The US Market is leading with a fairly smooth uptrend
• The ASX has been languishing in a malaise of sideways price action for months
• The TSX has been much the same as the ASX but the recent slightly lower low is hinting at some impending weakness if the previous day’s rally doesn’t follow through strongly
• Hong Kong appeared to break out of it’s down trend in May but has taken a long breather now since then and appears to be in a holding pattern

However looking below the surface of the US market there are some interesting observations:

• 64% of Nasdaq 100 stocks are above their 50 day moving average… but
• Only 44.86% of the Russell 3000 stocks are above their 50 day Moving Average

What does this mean? It is a tech-centred rally in the US market and not a broad based bull market. I am not sure how long this will go on for, but the AI mania continues to drive a small number of stocks forward while the rest of the market languishes. Good time to be in tech…

… I fear that there will be another tech bubble burst at some point, at which time it will be great to ride that wave all the way down, just like in 2000, but for now, the mania continues, and I have long since learnt not to fight the market

Follow your systems!

I thought it might be interesting to share the equity curve plot of my systems here… I don’t have room to publish all of the stats, and I am adding new systems all the time. But here is the plot of all the equity curves.

You will see that none of them make money all the time, but with enough systems there is usually something that is working. I don’t actually trade all of these… some are live, some are in incubation to go live soon, some I am just paper trading and some are experimental.

I have a cool process that runs a backtest of the entire collection of systems each week and aggregates the equity curves so I can monitor what is working and what is in drawdown. This is also useful for stability and edge monitoring.

Let me know what you think..

Trading Tip: Recognize and Overcome Cognitive Biases

Cognitive biases can significantly impact your trading decisions, often leading to suboptimal outcomes. Here are some key biases to watch out for and strategies to mitigate their effects:

• Loss Aversion: Traders often hold onto losing positions too long, hoping for a reversal. Set strict stop-loss orders and adhere to them. Remember, cutting losses early is crucial for long-term success.
• Confirmation Bias: This bias causes traders to seek information that confirms their existing beliefs while ignoring contradictory data. To overcome this, actively seek out diverse perspectives and data points. Implement objective trading systems to minimize personal biases.
• Anchoring Bias: Fixating on specific reference points, like purchase prices, can cloud judgment. Focus on current market conditions and make decisions based on objective analysis rather than past prices.
• Overconfidence Bias: This bias leads traders to overestimate their abilities and take unnecessary risks. To combat this, maintain a realistic view of your skills and seek advice from experienced traders. Regularly review your trading performance to stay grounded.
• Herd Mentality: Following the crowd can lead to poor trading decisions. Develop and stick to your own trading plan based on thorough research and analysis. Trust your strategy rather than succumbing to market hype.

By recognizing and addressing these cognitive biases, you can make more rational and objective trading decisions, ultimately enhancing your trading performance. Stay vigilant and continuously refine your approach to mitigate the impact of these biases.

What strategies have you found effective in managing cognitive biases in your trading decisions?

Member Wins

Our MEMBER OF THE WEEK is….. Shane S.

Unanimous vote from our coaches this week for Shane who has been utilizing the Forum, attending loads of Live sessions, and asking great questions!

So exciting to see you progressing Shane, keep up the great work!

News from EST

Wow it’s hard to believe the first half of 2024 is almost over. We’ve changed a few things here at EST and since in Australia, the end of June signals the end of our financial year, I thought it would be interesting to look at a few statistics:

• We’ve welcomed 36 new traders into our Trader Success System
• We’ve welcomed 16 new traders into our Crypto Success System
• We’ve provided 192 new traders with trading strategies from our Trading Strategy Hub
• We’ve provided 14 new traders with signals from our EST Signal Service
• We created a FREE Resource Hub to help traders improve their results fast and given access to 1,024 traders
• We have had 116,300 views on the EST YouTube Channel for a total of 4,800 watch hours and added 1400 subscribers
• I have presented 4 webinars for Interactive Brokers
• Our website articles have been clicked on 26,900 times from Google search
• And we’ve given away countless cheatsheets, checklists and multiple resources to fulfill our purpose to transform people’s financial lives and further our mission to help more than 2500 traders globally each year succeed quickly by disrupting the way trading education is delivered.

To everyone who has supported us in this mission, thank you. I look forward to continuing the journey to systematic trading mastery with you.

On the Home Front

It seems we’re sliding too slowly into the mid-year school holidays for my kids!  Everyone is ready for this term to be over and for the holidays to begin…. although it will be a quiet one with my son preparing for his HSC trials upon return next term.

With the weather cooling down, my garden harvest is doing well to keep us in hot soups and roasted vegetables, particularly pumpkin!

Even Gizmo is feeling the cold!

Have a great week.

Remember – You’re only one trading system away!

Adrian Reid

Founder – Enlightened Stock Trading