The Latest In Stock Market News - What You Need to See Before Investing - 23 Feb 2023!

Hi, Adrian Reed here, founder of Enlightened stock trading. It's the 24th of February and this is my weekly market update on what's happening in the markets, the state of systematic trading and what's happening at Enlightened Stock Trading. So what's happening in the markets this week? First of all, let's have a look at a couple of the big charts. This is the S&P 500 index and look, there's been some, some declines in the prices this week and that's cause I've noticed in the, in the chatter online and in my student group and a few other places, I've noticed a little bit of uncertainty concern because the market started dipping again. And what's interesting is if you sort of zoom out here, you can understand the reason for the concern, but you can also have potentially a little, find a little bit of reason for optimism as well. The reason for the concern is since February or late January 2022, the market's really fallen a long way. We had a decent sized bear market here, several major lower highs, several major lower lows. But in October looks like the market sort of reached a capitulation point and has rallied since then. And we've had a higher high, higher low and another higher high. Now we're correcting this. This correction is the source of nervousness because we still have this big bear market from, from this whole period in.

In the back of our minds we've still got all of the concerns about the economy and interest rates and inflation's in the back of our mind. And when you look at the markets, those sorts of things really cause your emotions to come up. And what we've got to do as systematic traders really is stick to the facts as the market presents them, as the price presents it, right? So if you look at this, what's actually happened? Well, let's zoom in and see. We found a bottom in October. We had a big rally and a pullback and then a new higher high and a relatively small pullback. I mean it's only about 150, certainly less than 200 points. So this is not really in of itself that much cause for concern. If this is the low point here, it's still a higher low, which means the long term uptrend is still intact. But the fear comes up, right? Because we're, you know, we're fearful monsters, us human traders and we worry that what if this is the start of the next big down leg? And maybe it is, right, but the market hasn't shown us that yet. So all of the nerves need to just calm down a little bit because right now it's just a bit of a pullback and there was even a little bit of strength sort of mid to late this week. We'll see what happens in the U.S. it's Friday here in Australia, so the U.S. market obviously open tonight, Australia time, and we'll see what happens there. But right now it's a pullback in a new uptrend and you know, that's potentially cause for optimism because if that new uptrend holds, then what we're gonna, you know, what we might see is another big up leg and, and some decent profits on the long side from that. But it's also still pretty early in the, in the, this uptrend that we've, that we've got here, this high series of higher highs and higher lows. So we want to be a little cautious. I'm certainly trading pretty conservatively right now and I mean, I generally do on the whole anyway. But the last couple of years I've certainly taken off a lot of the aggressiveness in my trading just to keep my drawdowns minimized and to make sure they sleep well at night when the market is being indecisive, when the market really chooses a strong uptrend, then you know, a little more, a little more aggressiveness can be, can be tolerable. But when there's, when there's so much uncertainty in the market, really quite dangerous, I feel. So I'm just keeping my trading really cautious, really conservative. I'm not overly leveraged and I'm certainly not trading big positions. So in the S and P there's concern because of this drop, but really there's no evidence that that medium, medium term new uptrend has really changed. Let's have a look at the Australian market and to be honest, it's much the same picture. But I have to tell you, it's kind of nice to see the Australian market stronger than the US market because it hasn't been that way for a while. We've still got, we've had a decent sized decline here. The pattern of higher highs, higher lows and the nervousness among the traders is much the same. But remember, we haven't yet seen any evidence on the chart that there is a new downtrend in place. We're still in the early stages of a new uptrend. If we zoom out a little, you'll see basically a double bottom, higher highs, higher lows. And if this holds and turns around, then that's just a new higher low in an early stage uptrend. So cautiously optimistic we'll have to see. My long side trend following systems are basically fully fully loaded. I've had a few trades come off this week because of the decline, A few things got stopped out, a few exit signals but I still have a lot of longs in the market. None of my short systems have turned on in earnest yet. So you know, cautiously looking at a bit of a bull market at the moment. But we'll just wait and see whether this holds up and next week when we do a market update, we'll will have a better view of that in Hong Kong. I've talked about Hong Kong a lot before because I really like the Hong Kong market. The reason I like the Hong Kong market is because it moves quite differently than a lot of the other markets that most traders trade. If you trade just Australia or just the US diversifying into a market that moves quite differently is really powerful. And I like Hong Kong because it moves to some quite different drivers, underlying drivers of the economy and the buoyancy in the market is quite different to what you see in Australia in the US So if we, if we zoom out on Hong Kong, I mean you'll see that there was a big honking downtrend, it was really quite strong. But it did come out of the downtrend in at the end of October, November had a strong rally and now we're in the middle of a pullback. So the global weakness that we saw in the S and P kind of similar except Hong Kong was hit much harder in the bear market. So in, in Hong Kong I had a quite a few short positions or quite a few spots where my, my short system in Hong Kong turned on, hit profit targets, went to cash and then turned on again, hit profit targets, went to cash. And so this diversification I'm finding really useful of the U.S. australia and Hong Kong. And so you know, if you're sitting in one of those markets thinking well my returns are not great, what should I do? One of the things you can consider is whether diversification offshore into other stock markets could help. I've certainly found this to be helpful for my own trading. So what's happening in the Hong Kong market? We've had this big rally and much the same as Australia and the US in February we've had quite a lot of weakness and so my long side exposure I got basically fully long in Hong Kong around mid to late, well early to mid December rather. But in the last couple of weeks my Exposure has been coming off so I've still got some long positions of stocks that have held up well but.

The weakness is quite pronounced here. So a lot of those are getting exit signals so we'll see what happens. Again, cautiously optimistic. There's no sign on the chart here that this is a new long term downtrend but we want to watch where this goes. If it doesn't rally and take us up to a new higher high soon then our short system could be turning on which you know I'm happy about because my Hong Kong short system works really really nicely. And if there is a down leg in this market it's probably going to be pretty vicious because you know the only real support here while it's a probably a bit of support at the 1900 level around about there and then all the way down at just under 1500. So if this doesn't hold we might be in for another big down wave which could be kind of cool. If it does hold then I've already got a little bit of long exposure with my Hong Kong trend following system so that could, could benefit us as well. So I kind of like, as I said, I like the diversification of three different of multiple different markets internationally. Canada the story is much the same as Australia. This is the Toronto Stock Exchange composite. The pattern looks very, very similar, not quite a double bottom in Canada there was much more weakness in October but then a rally higher high, higher low and now we're pulling back. This is looking a little basically about the same level of sadness to be honest as the Australian market. So.

Still potentially some longs on the trend following systems in Canada. But again exposure is coming back, coming off so we'll see what happens there. If that rally fail, if that new uptrend fails then we've got the short system in Canada in the trader success system. So that'll, that'll help us profit from that down leg as well. Not a whole lot of good news Elsewhere gold is suffering as well. Lets look at Bitcoin.

I sent out a note to my subscribers this week which was interesting back here in November. This is the collapse of FTX and.

Basically the fear that the whole crypto world was going to implode and there was going to be some whole lot of contagion. Other brokers would fall or exchanges rather would fall and this is the whole nervousness around that. There was a whole lot of rumors around Binance's solvency in here as they sort of abated and people realized that the world wasn't going to come to an end. There was a big rally back to normalcy here and we've since had higher highs and higher lows and then another rally and we're pulling back. So, you know, what I'd really like to see here to confirm a new uptrend in bitcoin is, you know, this might come off a little bit more, but I certainly want a low above this level and, and then hopefully a rally. Again, cautiously optimistic here, but I'm not going to get excited until I see at least another wave. Strong, strong leg up in, in bitcoin. So in crypto, look, there's some good moves right now, but there's, there's certainly room for caution. We don't want to be, be too aggressive, don't want to jump in all leverage, because that, that bull market that we're seeing in bitcoin at the moment is, is pretty new and not very, not well established and there's been a bit of weakness in the last few days. So let's wait and see over the next week and I'll give you an update next week on what, what happens with that. Alrighty, let me. I've got a trading tip for you this week. I hope, I hope you're interested in that. I've been doing some really great work with my members in the Trader Success System, and one of the things we focused on this month is how to use your emotions to improve your trading rather than try, rather than trying to suppress your emotions. What I like to do is actually harness those, observe them and then use them as ideas to test and to improve our trading systems. And I won't go through the whole process here. Obviously I teach it in the Trader Success System and we spend quite a lot of time on it. But what we found, or what I found over the years is that when you're running your trading systems, every now and then there's a trigger, a buy or a sell that really gets your emotion up. It's something that generates some fear or some anxiety or maybe even some excitement in you. And what I want to encourage you to do is to observe those emotions and treat them as.

Warning signs or guideposts that there's something interesting to investigate. And what I do is I take those emotions and I identify the source or the cause of that emotion on the chart, like, what's the price action that, that really caused me to be fearful or excited or nervous or whatever it is. And, and I take that and I convert those to rules and ideas and I add them to my trading system and see how my emotional reaction, if I had followed through with that, would have impacted my trading results. And the great thing about this, I call it back testing your emotions. The great thing about backtesting your emotions is only one of two things can happen. The first thing is you put these rules in and you see how your emotions would have affected your trading. And you notice in backtesting it would have just destroyed your performance, it would have ruined profitability, and in which case that gives you more confidence to follow your system. The second thing that can happen every now and then is you find a little pot of gold, a little a rule or a set of market conditions that is not favorable for your trading system or your trading rules. And you, if that's the case, it's very rare. But if it does happen, your emotions have just led you to an exciting discovery that can make you a ton more money. And that leads me really nicely to my member of the week award in the Trader Success System. I like to look at how everyone's doing and who makes great discoveries and who makes great progress this week or this month rather. Craig, one of my members, made this great discovery when we were doing this back testing your emotions exercise. He had this observation of a chart which made him really uncomfortable. And in our workshop, we looked at that chart and we identified a rule that would eliminate stocks that moved with that pattern from his backtest. And wouldn't you know it, it dramatically improved the system. And so this is one example where you don't want to just ignore your emotions and suppress them and just blindly follow your system. You know, this identified a little particular type of market movements where if we ignore or eliminate trading signals, buy signals that exhibit that pattern, we actually end up a lot more profitable. And so that was really, really exciting. So Craig did great work identifying that, articulating what it was, sharing it with the group, and then we coded it up, added it to the system. It was a really, really great result. One of the most exciting things when you find just a little tweak that makes a huge difference in your system performance. So well done, Craig. Really, really impressed with your efforts on that one.

A couple of other interesting things we've been doing in the Trader Success system. Just as an update for my members, we've been focusing on how to develop a new trading system from scratch in the System Builders Club. And this is a really great exercise because what I noticed is a lot of people, a lot of traders are okay to take other people's ideas and just follow them, but very timid at developing their own ideas from scratch. And so we had a great session this week where we took an example, a hypothesis sort of move, and we sort of codified the conditions, the setup conditions, the entry conditions, the exit conditions, and we talked through all of that. We brainstormed some rules for each of the different components of the trading system and we put it together and we tested it. Now still a work in progress. I'm not sure if it's going to be an amazing system yet, but that process of developing your own trading systems from observations in the market, super, super powerful. So if you haven't been able to do that yet, if you haven't been able to take your own trading ideas, articulate them, clearly convert them to code and backtest them, then the success system is probably a really great thing for you to consider. Because what it does is give you the skills, the competency and the tools to do that for yourself. Which means that you can be generating trading ideas, constantly test them, throw away the bad ones, implement the good ones, and constantly improve your portfolio, which I really, really love.

So that there's a trader Success system this week we also have a couple of bits of news on the EST front. If you have a look at the inline stock trading website. My most recent blog post is a real good one, really interesting for you to read. It's the risks and rewards of Short Selling. I took a closer look at the practice of trading short and so I'd encourage you to have a read of this because if the current this emerging bull market fails, then you're going to want to be comfortable trading on the short side. So this article I go through, you know what short selling is, how does it work? I talk about the risks and rewards of short selling, how to find stockbrokers to short with frequently asked questions and so on. So a whole bunch of content there. If you're not completely comfortable with shorting, that's the article for you. So just go to enlightenedstocktrading.com and then click on the blog. It's the first article there right now. A couple of other announcements. I've re released a completely revised version of the Crypto Success system and I can't tell you I'm so pumped about this because the the Crypto Success System is one of my one of the courses I'm really proud of and really excited about. So in the Crypto Success System you can see it here in the products and programs. Crypto Success System we've completely revamped all of the trading Systems incorporating the new data from the most recent bear market. We've revised the systems, made them even more stable and managed the risk even tighter. So we've got some really great results coming through and all of a bunch of the lessons have been rerecorded and updated. So if you're interested in learning to trade crypto systematically to avoid, eliminate the, the emotion, eliminate the fear and eliminate the massive, massive drawdown that you have trading crypto when the markets are in a bear market phase, then the Crypto Success System is for you. The final announcement is. I've also re released the System Trader Launchpad program. Now, I haven't made System Trader Launchpad available for probably over 12 months now, maybe pushing 18 months. And this is a really great program if you're a beginner and just getting started in the world of systematic stock trading. So System Trader Launchpad teaches you the hows and whys of trading systems and why they work, how to apply them, where the profit comes from, teaches you three different trading systems to get started with, how to apply them, how to use them, how to get into the market safely, and how to manage those on an ongoing basis. So if you're looking to dip your toe in the water of systematic trading, then check out System Trader Launchpad and get into that. It'll get you started up and running in just a few weeks and give you the confidence to take those trades. So their announcements for this week, that's pretty much all I've got for you. If you really want to master systematic trading, if you want to learn how to manage your emotions and use those emotions to leverage and improve your trading results, then the Trader Success System is where you want to be. My active members are loving the program. We had great live sessions this week and the weekly Q and A sessions, acceleration sessions are just going so well. I'm so pleased with my coaches. They're doing a great, great job. So if you want to get some guidance, get into a community of systematic traders who are growing and learning together and master systematic trading quickly, then click the link in the description below and join the Trader Success System and hopefully I'll see you in there. That's all for my update this week. I'll see you in the next one. Bye for now.