Newsletter - 9/17/2023
Are you frustrated?? Holy crap I AM.
I mean, the market goes up on bad news, down on good news.
What's more, there is an overwhelming amount of evidence that the economic fundamentals are getting seriously worse.
But have hope - I have a plan - and a way I am going to make money while I wait for this market to commit!
This week's market drivers.
Ok, this week it's easy - IT'S ALL ABOUT THE FED. Actually, it's all about what and how the Fed statement is presented and then received.
Frankly, this just adds to my annoyance. I mean, the Fed statement this week will be parsed and analyzed, especially the forward looking portion: is the Fed done? JPM thinks so. Is the Fed pausing? Is the Fed going to raise more, as they should to bring inflation under control?
Currently, Wall Street is firmly in the camp of the "Fed will pause" and even sees rates going DOWN!!
I have my own opinion which is consistent with recent Fed history: the Fed will do what's best for the markets and therefore pause. Beyond that, I honestly have no idea - at least not a strong enough opinion to offer.
SPY Commentary
The daily chart says it all. The grey box is the range that the SPY has been stuck in since JUNE 15!!!
This is not a market that is confidant of direction meaning that market participants are begrudgungly remaining long while at the same time being short. That's the reason for what I call this CHOP FEST. The market is chopping around and right now, every catalyst that SHOULD have sent the market down has not. That tells me that there is still an underlying bullishness to the market and until trend changes the SPY is BULLISH.
OR
The market is in a topping process. Frankly, the price action since June is pretty indicative a market unable to make new highs and unable to break down. The fact that bad news has been ignored is secondary to the fact that the market has not been able to advance. Also, the weeping and gnashing of teeth all over FinTwit and yours truely is a classic sign of market tops.
WHICH SCENARIO ARE YOU CHOOSING??
BLAH BLAH BLAH - WHERE ARE WE HEADED???
Yeah, OK Boss - so you don't even know where we are headed?
NOPE.
BUT - I do have an opinion based on experience.
Here are, imo, the most likely scenarios, and they don't all end with down.
SCENARIO 1: UP to a blow off top then down. FED pauses AND their language is slightly dovish.
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Price moves up to +2sd
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Price moves down to +1SD as support
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Price moves up to the 200dma as resistance
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Finally price reverts to the mean
There's your 20% drop. And then some.
SCENARIO 2: Up, then more up, and then more up.
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Price moves down to +1SD as support
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Price moves up to current highs and rejected
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Price moves down to +1SD yet again
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Price takes out the highs
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Price retests the current highs as support
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Price goes to the moon
HOW tf? Inflation. If you don't think this could happen just look at the second chart. When inflation happens, it inflates ALL ASSETS.
SCENARIO 3: Down, down down down.
This is the "something finally breaks" scenario. The Grey Swan.
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Price moves down to +1SD as support
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Price moves up to current highs and rejected
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Price breaks +1SD to the downside
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Price drops to the mean
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Price retests +1SD as resistance and fails
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Price drops to -1SD as support
Even the "pros" don't know, which is what the next chart is telling us. Equity positioning is currently almost at 50%. Equal long and short.
SO, BOSS, YOU HAVE NO IDEA??:
"Great, so you don't know MRNA?" - Of course I don't know the future.
"So why the hell am I paying money or attention to you?" - Other than the fact that I am incredibly good looking and charasmatic, BECAUSE I AM PURSUING THE FIRST GOAL OF TRADING, ALWAYS: PROTECT CAPITAL.
Seriously, how much money would you had been losing firing away at this market? Cmon. Be honest.
Yeah, I thought so.
WHICH DOOR DO I CHOOSE?:
I choose Door #1 as the most likely. I HOPE Door #2 never occurs.
But push me into a corner, and I believe that Door #1 followed by Door #3 are the most likely scenarios. Because Door #2 will mean soup lines and a Depression that will change history. Soup lines. Average Joes and Janes, and their kids, living on the streets. Riots.
I truly believe the highs are so close that they will be tested. AND when they are, the direction of the market will depend upon IF retail is fooled and sucked in.
I sound like a broken record but UNTIL PRICE FINALLY COMMITS it is near impossible to predict which direction and with what force price will move.
Which Door are you choosing?
WHILE YOU ARE WAITING. . . . :
So, while I am waiting for all of this to resolve itself, what do I plan on doing to generate Alpha?
I will be taking shorter term trades with select indexes and ETF's based on my TA. Look, I have shown that I am able to identify short term trends - like days. So I will be using 1 month options to generate Alpha.
I have a couple of conditions though:
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I will only do when it is a no Fed news day
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I will only do when no market leading company is reporting
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I will only do with 5% of my total
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I will have tight stops of 2-3%
I will targeting returns of 10% to 20%..
TO BE DISCUSSED IN DISCORD. . . . :
You want to trade like a professional? This will be one of the ways. Trading rumors. lottery of course. But we will review what it takes to profit off of "chatter." Not for the faint hearted.
CLOSING COMMENTS:
I have a CRAP TON of stocks I am waiting to trade. but I won't until the charts tell me to.
Remember the first rule of trading. Just because I have been trading less does not mean I am done trading. I am waiting for the correct conditions.
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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.
Thankyou Family!
theBoss
If you are interested in taking a huge step forward toward profitable trading, then sign up for a paid membership HERE!
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.