Stock Market Update|While stocks hold their breath, is this the Bitcoin breakout we have been waiting for…

This week’s update is a little more brief than normal as I am pressed for time with the school holidays and family commitments.

The markets continued to hold their position and edge up a little this week. The Canadian and Hong Kong markets sitting above their 200EMA while the US markets are still lagging behind. If I was to personify the markets I would say they are holding their breath waiting to see whether the next move from the White House creates shock or stability… I am not betting either way and I am glad my portfolio is sitting on a lot of cash at the moment!

Aside from the Hong Kong market, all of the charts below are showing a recent significant lower low and a rally that has not made a new higher high. Despite the rally there is still a significant chance that this ends up being a bear market rally.

In Hong Kong, however, the long term chart is looking much more healthy with multiple long term higher lows and a March higher high that was above the October 2024 high. So a medium term bull market there still seems likely.

The table of global indices below is showing all markets edging forward in the last week. I would say this is all highly correlated to the easing of the uncertainty coming out of the White House, but it could certainly change on a dime with the next announcement. 

My portfolio is pretty conservatively positioned with plenty of cash, long and short positions open and a decent allocation of gold. This sort of portfolio mix is not going to make me a ton of money in the near term, but it should prevent a shock in either direction from hurting me. As the market picks a direction the systems will naturally adjust more towards either risk on or risk off, but for now it is fairly neutral.

I often watch the balance that the diversified portfolio of systems I run generates with great interest to observe how it loads up on different strategies as the markets move. It is one of the most fascinating things in systematic trading.

The more diversified the portfolio of systems has gotten over time, the smoother these transitions are and the less stressful market transitions become.

There is a lot of strength emerging in Crypto at the moment with both Bitcoin and Altcoins rallying this week. Both major crypto indices in the table below are up over 10% which is a really welcome change. 

The Bitcoin chart (below) is looking particularly strong and there is a good chance we are in for a new upleg in the bull market here. If there is a retracement which holds above the 200 EMA on the chart below I would say the long term bull market is back on.  

I am expecting that this rally holds (though there is bound to be a pullback so I wouldn’t be FOMO-ing in if you are on the sidelines).

Looking at this chart made me wonder how effective different lengths of breakout are in Bitcoin. So I put a super simple system over Bitcoin to see whether a 50 day breakout (like we currently are experiencing) is a good entry or not. The system is simple – enter on a new X bar high, exit on a cross below a Y period EMA.

The charts below show the return and drawdown profile over a wide range of parameter values for both breakout periods and exit EMA lengths. As you can see, the return for the shorter breakout periods is much higher – obvious really, because Bitcoin has moved up massively over time and the trends are pretty explosive, so the earlier you enter the better from a return perspective.

However the drawdown profile for the shorter period breakouts is much worse because of the large number of false breakouts. It is not until you get to about a 75-100 day breakout that the drawdown really becomes manageable.

So while it is tempting to FOMO in to the smallest breakout Bitcoin shows, this analysis shows that patience is rewarded with a smoother equity curve and more tolerable drawdown with longer term breakout entries.

So while this breakout may be a little premature to fully load up on, it is looking like a new leg of the crypto bull market is emerging which could be hugely profitable, especially as altcoins are also rallying at the moment.  

If you are not in crypto, or not yet systematic in crypto now would be a good time to consider joining The Crypto Success System to quickly establish a diversified portfolio of systems and position yourself for this situation. 

Trading Tip: Expanding your comfort zone

Expanding outside your comfort zone in trading is one of the most powerful ways to grow, but it’s also one of the most challenging. The key is to approach it systematically. Start by identifying areas where you feel resistance. Maybe it’s trading a new market, trying a different strategy, or increasing your position size. Then, rather than diving in headfirst, take small, calculated steps. For example, if you’re exploring a new market, backtest your system thoroughly in that market first to build confidence in its performance. Once you see the numbers, it becomes less about fear and more about executing a proven plan.

Remember, discomfort often stems from the unknown. By doing the work upfront (backtesting, analyzing, and understanding) you turn the unknown into something familiar. And as you repeat the process, what once felt foreign becomes second nature. It’s like learning to drive a car: nerve-wracking at first, but eventually, you don’t even think about it.

One last thing: don’t force yourself into something that doesn’t align with your trading goals or personality. Expanding your comfort zone should serve a purpose, like diversification or improving returns, not just ticking a box. So, ask yourself: is the potential benefit worth the effort? If yes, take the leap—but do it with a plan. What’s one area you’ve been hesitant to explore? Let’s tackle it together

Quote of the Week

The beginning of a new bull market never announces itself with fireworks and confetti. In fact, it often feels awkward, uncertain, and even downright scary. 

That discomfort is exactly why few traders capture the early gains — most are still frozen by fear, burned by the last downturn, or waiting for a “sure thing” that never comes. If entering a new bull market felt obvious or easy, prices would already be much higher and the opportunity would have passed you by. 

True systematic traders understand that discomfort is not a warning sign to avoid action; it’s a signal that fertile ground for future profits is being sown. Trust your system, stick to your rules, and remember: being early feels wrong before it feels right.

I am very keen to hear from you… Please reply to this update and let me know, are you trading Crypto at the moment? 

If yes, are you using a backtested systematic approach? 

If no, what is your number one concern that is preventing you from trading crypto?

I really enjoy hearing from you and knowing where you are up to helps me create useful content that can help you on your journey.

Remember – You are only one trading system away!

Adrian Reid
Founder – Enlightened Stock Trading

P.S. Whenever you’re ready… here are 3 ways I can help you improve your trading:

1. Learn The 10 Minute Trading Formula
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2. Join The Trader Success System
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3. Join The Crypto Success System
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