Welcome to this week’s market update! No video this week because I am not in a spot to record one, but I didn’t want you to miss out so let’s do it the old fashion way.
I was fascinated to see how much variation there has been in the global markets this week. As you can see in the table below, there is a mix of both green and red.
While the US market continues to show strength, particularly in the Nasdaq, that is not the most interesting story going on in my view. In the last month we have seen the Chinese markets getting demolished. The latest casualty is mega property developer Evergrande… this has been a long time coming, so was not a surprise, but it does show how weak the Chinese markets are right now.
Of course the fear and weakness from the China mainland quickly impacts Hong Kong as well… I have mentioned my Hong Kong short system a few times recently and now that January is all wrapped up I can see that the system was up 13.5% for the month of January.
I know I talk about this all the time, but isn’t it awesome to be able to profit when the markets are falling?!?!
But what is even more awesome as a trader is to be able to profit from the US, Canadian and Australian market rising, and the Hong Kong market falling at the same time.
So I have a quick quiz for you to see just how diversified you really are. Here is how to calculate your diversification score…
Step 1: Add 1 point for every market you have a long side system
Step 2: Add 1 point for every market you have a short side system
Step 3: Add an extra point for each of the following trading strategies that you use:
- Trend Trading
- Mean Reversion
- Rotational Momentum
- Intraday Trading
Step 4: Add your total points and determine which ‘diversification bucket’ you are in:
- 0-2: Just getting started
- 3-5: Building Diversity
- 5-10: Mastering Diversity
- 10+: Diversification Legend
Next I want you to comment and let me know your score and which category you are in.
For bonus points, answer this question: What market / system combination will add the most diversification benefits to your portfolio next?
This is one of the most important question to ask regularly about your portfolio. I ask myself this question at least monthly!
I also want to show you that one ‘Market’ is not all uniform. Especially when you think about the ‘US Stock Market’ the S&P 500 is not the whole market. At the same time as the S&P 500 is making all time highs, Nasdaq is thundering upwards, but the Amex exchange is looking rather sketchy… Have a look at the chart below. If the Amex drops below the dotted support line we might have some good shorting opportunities while the US market is making all time highs – how interesting is that?!?!
I am thinking about the chart above that shows how different the main exchanges in the US behave so differently. I think my next project is to break my systems into the different versions for each of the exchanges. Do you do this? Comment below and let me know your experience.
Trading Tip of The Week:
Spend time thinking about what 3 next steps you can take to improve your diversification score. If you already have long side trend following system for US stocks, then adding another long side trend following system for US Stocks is not going to help you much! What system will actually improve your portfolio’s level of diversification? Members of The Trader Success System get access to a wide variety of systems for different markets, so the next step to diversify your portfolio is super easy to take! The program is closed right now, but if you are interested you can get on the waitlist so you will be the first to know when we open it next. Click Here To Join The TSS Waitlist
Member of the Week:
Our Trader Success System member of the week this week is Brett… Brett has just come back after a bit of a trading hiatus and has come roaring back. He has been asking killer questions and making the most of our Trader Acceleration Sessions. Keep up the great work and energy Brett!
News From EST:
We published a bunch of videos for you… these are all short, sharp thoughs to help you with your trading. Check them out, give them a thumbs up so I know that you have watched it and leave me a comment with any questions:
- Why Systematic Trading Is So Important to Your Future
- The Key To Successfully Navigating Your Trading Challenges
- Simple Trick to Truly Understanding And Dealing With Drawdown
- Why Good Traders Are Like Detectives
I am looking for more video ideas to help YOU. Comment below and let me know what you would like me to make a video on to help you improve your trading!
On the Home Front:
On the weekend my son had his 17th birthday party… we had a blast as a family scrolling through photos of him from birth to now. Google photos is just amazing – we just put his name in and it shows us photos from birth to now in chronological order. So awesome!
We have a tradition in our house where the kids select get to come up with any birthday cake idea they want and I have to make it. Some years this has been pretty tame, other years it is pretty mental.
This year Quin requested a cake in the shape of an Ultramarine Soldier from Warhammer in the colour scheme that he paints his Warhammer models. Here is what I ended up with just after midnight before his party
The cake looks a little battle scared, but he seemed pretty happy with it
The garden is going gangbusters and the fish are growing super fast now. today I went out and picked a salad for my lunch and ate it less than 5 minutes after it had been cut… that is just a little fresher than the local super market. Super tasty!
Time for me to sign off – I was up late last night watching The Family Plan on Apple TV (I should know by now not to stay up late on a school night, but it was really good so we couldn’t turn it off)… time for bed for me 😉
Have a great week!
Remember – You’re only one system away!
Founder – Enlightened Stock Trading