Newsletter - 6/8/2024
UPCOMING WEEK:
This is what I said in last week's newsletter:
"They are trying to use the Mag 7 to drag the rest of the market upward. So far, it is not working since the overall market has moved opposite the Mag 7 the past couple of days.
No matter - we will know this week."
Well, the market HAS broken to new highs and I do expect that to continue. For how long is anyones guess but I think the market has at least another 5% to the topside although this week with the FOMC and CPI numbers will go a long way in defining if this rally has legs. As I have said, the structural ingredients are already in place.
Having said that, I ALSO believe we are in a transition period where this up move will be the final advance before the market reverses due to the overwhelming negative macro data, led by #CRE.
ANNOUNCEMENT:
Starting with the first newsletter in July, I will be moving to a paid model for the newsletter only. It will be a nominal monthly charge of a couple of dollars and VIPs will of course continue to receive the newsletter for free. Watch your email for updates and how to sign up.
Week in Review
Model Portfolio - since 5/9/2023
This Week:
Last Week:
Sectors
SPY and QQQ
Friday's hammer candle was confirmed Monday as a Low Close Doji, a strong reversal pattern.
The rest of the week only confirmed the reversal to the topside.
In addition, the $SPY made a new ATH and now price needs to extend above the break level. This week will confirm or negate the breakout with FOMC and CPI.
The weekly also confirmed a LCD so both weekly and daily are in buy mode. In order for my blow off top thesis to occur, price will need to "separate" from the break level this week.
QQQ:
Just as with the $SPY, the $QQQs also confirmed a LCD this week. This was despite the Mag 7 being the Mag 5 and then the Mag 1 by the end of the week.
On the weekly chart, the Qs fought off the fact that the move was not a broad all sector move and broke to a new high. Now we get to see if price holds.
Doom Trades
$KRE
FROM THREE WEEKS AGO:
"Am I worried that the stock prices of my DOOM trades are going up?
NOPE
Why am I not worried?
Because NEWS WILL LEAD PRICE lower.
Price on these DOOM trades can go up 10%, 20% or even 100% and it will not concern me because the underlying fundamentals are deteriorating so quickly."
I am still waiting for the break level (see note below) on the weekly chart to enter my DOOM #CRE trade. Remember, it is not about capturing 100% of the move - it is better to wait for price to confirm the move and then enter.
Note: TradingView charts price their closes slightly different than TOS - I will continue to use TOS for pricing.
$BAC:
From three weeks ago: "$BAC broke resistance and is headed to the 41 level. If that level were to break I would be interested in taking a swing trade long."
$VNQ
Waiting. Waiting. Waiting. Waiting.
$HYG:
See that yellow line? That's the line in the sand. Below it on the weekly and I will look at getting short.
Current Open Positions
$FNGR Jun 4C for $.68 - VIP Only
I will be selling this position for a loss on Monday. Next.
$INMD Jun 19C for $1.00 - VIP Only
I will be closing this week at a loss. Next
$ENVX Jul 12c for $1.07 - FREE Trade
Price is consolidating now on the daily. I have set the stop level (yellow line) but my hope is that I can remain in this trade since I believe there will be more news over the next couple of weeks. However, price is price and I will respect it.
$HOOD July 23C $1.93 - VIP Only
That was an ugly candle on Friday - no doubt about it. Either price reverses early in the week or I am out.
$NU Jul 13C $.26 - FREE Trade
Price has moved back up, we got the retracement on Friday and now price either confirms the up move or I will be out for a small profit or breakeven.
$TQQQ Jun24Weekly 65C $3.31 - FREE Trade
BREAKOUT! I will not give back all my profits on this trade. I believe that the odds favor a further move up over a move down and this Wednesday's FOMC and CPI will either confirm a blow off top or negate it.
$AMSC Jul 21C $1.90 - FREE Trade
I know what you're saying: why not close your position Wednesday, Thursday or Friday and lock in profits?
Wednesday was the breakout.
Thursday was the retrace.
Friday price did not close below that yellow line.
It looks like Monday will be the decision day. This is part of the risk using daily closes BUT 9 times out of 10, it has served me well by keeping me out of trades or keeping me in trades.
$KDP Jul 35C $.75
Price broke significant resistance level on Tuesday and then spent the rest of the week testing the break. Close below the break level and I am out. As long as price remains above the break level, I hold.
Closed Positions
NONE
Doom
Do not think for one moment that I think Putin is a good person. He is a dictator. That's why it's a bit odd for me to say this: Thank God that Putin has exercised restraint. Before you stop reading in disgust, allow me to explain: Since at least the Bush II years, Putin and the US have had a detente: the US unofficially agreed NOT to move offensive weapons closer to the Russian border. And every single American president since then has done exactly that: moved missile launch capability closer to the Russian border. I am not saying that Russia had the right to invade Ukraine. What I am saying is that coupled with breaking the above "understanding" the recent moves by the US and NATO have been very antagonistic. Russia has nuclear weapons. The sheer stupidity of US and NATO policy has taken us two steps from a nuclear conflict. Now with the US giving the green light to use US made weapons to hit targets inside of Russia, exactly why does it matter WHO is launching those weapons, especially in what is a proxy war?
I fear that only if Trump (and I am not a Trump fan - I am a people fan) is elected will we avoid a nuclear "mistake." More importantly, it sickens me to see once again, as it has been through history, the global arms companies instigating conflict, the bankers profiting from funding and financing the conflict, the populace losing sons, daughters, Dads and Moms while the global elite just get richer.
Gamestop
With all of the focus on $GME this week I wanted to comment on why I chose not to trade it and why I think that $GME is a perfect example of exactly what not to do when trading and investing, and why:
1. How do you quantify any of the information that was coming this week, sometimes every minute?
2. How are you supposed to estimate what direction or change in price should be assigned to the "news" flow?
Look, $GME this week was all about emotion. And bias. It was about FOMO and YOLO.
I know how hard it is to no get caught up in the excitement of the $GME story and the buzz surrounding it.,
But ask yourself this question: WHEN was the right TIME to go long? How about going short? And at what price should you have gone long or short and not after the fact?
If you cannot answer any of the above questions then you have no business being in a trade. I don't care if its $GME or any other investment - if the only reason you are getting into or out of an investment is because "everyone else is" then you are DOING IT WRONG.
Investing and trading the correct way, the way where probabilities are in your favor, where you have a defined stop and target(s) AND you respect them. It is not unlike any other skill you are trying to learn: it takes practice, knowledge, discipline and self control to be successful over long periods of time trading and investing. If you are unwilling to do things differently then you will always have the same results.
Let me share a secret: successful trading is boring. Why? Because you do the same evaluation, the same management, the same exit for every trade.
Making money is secondary to following a sound trade methodology. Making money becomes a "given" IF you follow the rules. Following the rules is the goal.
And investing in $GME like situations will give you that endorphin rush which might be strong enough for you not to even really care if you make money - and that is what many investors do: they chase the rush, they want to be part of the "in" crowd or the "hot" discussion topic.
Do you want to make money or ride the "rush?"
Why My Teaching Works
I have been meaning to do a short summary of why I am so confident that what I teach and how I teach will lead to success for dedicated students.
At a very base level, this is the progression I go through with each and every student:
1. Build a foundation of knowledge of how to read candles,
support and resistance levels across any timeframes.
2. Learn how to use probability and statistics to evaluate
trade setups.
3. Learn how to screen and find possible trade candidates.
4. Learn what data and information is necessary and what
is merely "noise."
4. Put into practice in order to "rewire" your brain which will
eventually overwhelm your emotional triggers.
In order to be a doctor, or any other professional skill, there are many ways to learn. Reading, studying, watching a professional. All of these are useful and necessary.
But if you want to REALLY learn any new skill, the absolute best and quickest way is to have a mentor and a coach. Someone who can be the voice of reason, an encouragement and a guide.
I will leave you with this: if you want to be a successful trader then stop trying to "figure out" how to do it because thus far, it hasn't worked.
And finally, if you think you CAN just "figure it out" ask yourself this: would you trust a doctor that "figured out" how to practice medicine? Then why are you trusting yourself to "figure out" how to invest?
PODCAST:
The Podcast library is here.
VIDEOS:
The Video library is here.
Paid Memberships:
Look, there are a LOT of scammers out there on FinTwit. 99.99% of them care only about selling packages of crap. SOME OF THEM ARE CHARGING AS MUCH AS $5,000 PER MONTH! None of them include what helped make me a better trader: having a mentor. Having someone who will be your PERSONAL TEACHER, COACH AND ACCOUNTABILITY PARTNER. A Mentor that has over 90,000 hours of screen time. That by itself is invaluable.
People ask why I charge. First, I want only VIPs that are committed and "having skin in the game" guarantees this. Second, because my time is valuable.
See what others are saying:
MERCH STORE IS OPEN AND LIVE!
Don't forget the Discord live chat is STILL FREE but it will be closing to new members soon. In fact, we have already started removing non-active members.
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In the meantime, come and join us - its the best community out there: Discord.
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Also, be sure to check out the new page for Daytrading on the website, run by the fine gents @BaconTurkeyClub and @Juggernaut. If you ever wanted to learn or just watch two pros daytrade live, they are at it every day here: DiscordFuturesChannel.
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Finally, be sure to check out VampireTrades and his amazing penny stock trades.
Thankyou Family!
theBoss
Nothing above is investment advice nor should it be construed as investment advice. It is offerred for entertainment purposes only. Always consult your advisors before investing any money. Do not "follow" or "mirror" any trade ideas provided. Mr.NotAdvice is not a licensed or registered investment advisor. Do your own research.