Newsletter - 6/25/2023
I hope your summer is going well! I am super excited about the group we have grown and even more excited about what the future holds. There is something extrememly powerful about bringing like minded people together working together toward a common goal. Just ask the Wagner Group.
PREVIOUS WEEK MARKET:
The overall market was able to push through my price levels BUT, as often happens, it probed higher and then failed, quickly. It s too early to say whether this is the reversal to the downside we have all been waiting for but both the QQQ and the SPY printed DAILY confirmed reversals. What remains to be seen is if the downward trend will accelerate and continue.
When dealing with the indexes, and in order to prevent getting chopped up, I use the WEEKLY chart as confirmation of a reversal. While you might think that doing so "gives up some of the profit" it is important to remember the first rule of trading: preserve capital. By waiting on the weekly charts, we are able to rely upon a much stronger confirmation which reduces risk and thereby protects capital. Patience = probability in trading. Let's look at the charts.
SPY broke through the 431.68 resistance level but reversed shortly thereafter on the daily.
Short Term: Bearish
Mid Term: Bullish
Long Term: Bullish
WHEN CAN WE SHORT THIS MARKET???:
I will short this market when the WEEKLY confirms a High Close Doji. That means I need to see the markets close below the low of the most recent weekly candle that made a high, and it must be done within three weeks of that candle. The high candle is the Trigger candle and now I am waiting for the Confirmation candle. This week did not confirm so we have to wait and see if the upcoming candle confirms.
In order for me to get short the SPY I need to see a weekly close below 430.17, last weeks Trigger candle low.
GEOPOLITICAL COMMENTARY:
With news that Vladimir Putin has fled Moscow breaking as I write this and the Russian mercenary group, the Wagner Group, advancing on the capital,. the war in the Ukraine could soon be over. If this happens, I expect the markets to rally into a "blow off top" as the world "joyously" celebrates the removal of one murderous dictator for another. If you think about it, the end of the war in the Ukraine would have little economic effect on the US but would significantly affect the Eurozone economies. First, they could send all the Ukrainian refugees back home which would help cut domestic spending in the Eurozone countries as they currently are financially supporting the refugees with an open door policy. Second, at least temporarily, the flow of natural gas would not be at risk and that would act as a stabilizing force to the Eurozone markets. But any celebration will be short lived in my opinion because the head of the Wagner Group is not a politician, he is a mercenary. I reminded of the old saying: "Be careful what you wish for." You can bet the US is already in contact with the Wagner group but it remains to be seen if the head of the Group will transition to a leader or remain a mercenary. I expect that the US will attempt to capitalize on the instability by securing contracts for some of the vast natural resources that Russia has. Who knows if the Wagner Group head will be open to discussions since he is vehemently pro-Russian - old style Russia. Either way, it appears that geopolitics will be a driver of the markets next week, at least the early part, which will provide a welcome distraction for Powell away from the deteriorating economic conditions in the US.
UPCOMING WEEK:
Tuesday and Thursday have important economic news and of course, Powell is slated to jawbone a couple of times this week:
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Tuesday: Durable-goods orders
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Tuesday: Consumer confidence
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Tuesday: New home sales
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Wednesday: Fed Chair speaks - make sure to listen for continued talk about rate hikes
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Thursday: Fed Chair speaks
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Thursday: Initial jobless claims - big market mover
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Friday: Core PCE
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Friday: Consumer sentiment
CHOP CHOP CHOP:
I want you to be aware that if the market enters a period of indecision, with no clear bullish or bearish trend, price action will become choppy. This is a very difficult environment to trade long or short and can result in false moves in either direction. This, in turn, can create higher than usual trades that get stopped out.
Therefore, the trade volume I do might be reduced materially in order to preserve capital, even when there are excellent setups. It is difficult to fight the trend so to speak with individual stocks so I want to prepare you that if we enter this type of market environment, I will trade less.
Preserve capital!
CLOSED TRADES THIS WEEK:
We closed some nice trades this week:
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CORN: sold half for +209% (8 days)
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CORN: sold balance for +107% (9 days)
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MEI: +83% (2 days)
- TSLA: +129% (16 days)
- GOOG: -54% (15 days)
- SOFI: -40% (10 days)
- DLO: +46% (18 days)
- SOFI: -31% (1 day)
MODEL 5K PORTFOLIO:
Since May 9, here are the numbers:
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Total Return: +120%
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Average Return: 87.90%
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Average Hold: 7.33 days
*Note that starting this week I will be adjusting the position sizing of the model portfolio. Currently I have been computing position sizes off of the original $5000 starting balance and not the current value. Starting this week I will compute position sizes off of the current value. This is more realistic as I have been "hand cuffing" returns by using the original balance.
TRADE IDEAS:
We entered some great new trades this week, with a couple already up!
If you are not a Member and want to see these, become one here.
TRADE UPDATE:
OHI
Price is moving in our direction toward our first target.
+3.03%
WELCOME NEW PAID MEMBERS!
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Darius
REMEMBER THAT PRICES GO UP IN A WEEK!
WHAT I AM LOOKING AT:
I will be watching the developments out of Russia closely as well as whether or not the indexes confirm a reversal on the weekly. As I mentioned, trade volume might be less if the market starts chopping around.
We have a couple of earnings plays this week as well.
I have a LOT of stocks with alerts but if the market gets choppy, I will take that into consideration before entering any new trades. Cash is a position and patience equals profits.
Remember that a lot of the time, our positions go red before turning in our favor. Either way, the model portfolio is doing fantastic.
I encourage you to take advantage of the lower Membership prices while you can and remember that we are getting close to the 100 member Discord target before I close the room.
If the market gets choppy, I will be conducting some live learning sessions in lieu of trades.
CLOSING COMMENTS:
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If there are any stocks or investments you want me to look at, send the to me at info@MrNotAdvice.com. I will answer them in next week's newsletter.
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Don't forget the Discord live chat is STILL FREE but it will be closing to new members soon. In the meantime, come and join us - its the best community out there: Discord.
Thanks and let's keep keeping on!
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.