Spencer Li

Market Analysis – Is the 2nd Wave of Sell-offs Coming?

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While the US economy looks to be slowly re-opening, we are seeing a lot of bearish news in the market.

Will there be a 2nd wave of infections, and a 2nd wave of market sell-offs?

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Market Overview

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Daily Trading signals
Looking at the various markets, it looks like this week going into risk-off mode, where traders take on defensive positions, and possibly shorts on the stock markets.

 

Stock Markets – Next Wave of Selling?

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While the US is gradually re-opening its economy and easing restrictions, this might lead to a new wave of infections, since their cases and death rates are still rising, which shows that they have not totally got it under control.

Also, tensions between the US and China have been escalating, as the US Secretary of State Mike Pompeo saying that there was a “significant amount of evidence” connecting the coronavirus to a lab in the Wuhan region of China.

Over the weekend, during an interview with Warren Buffett, he said that he had sold all his airline holdings. While he was optimistic on the long-term outlook, he also mentioned that the pandemic has damaged some industries permanently, suggesting that the economy may not “return to normal” that quickly.

On the plus side, Gilead’s antiviral drug, Remdesivir, will be available to coronavirus patients this week.

 

Bitcoin – Amazing Profits in One Week!

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Bitcoin was our most profitable trade last week, with an epic price surge of close to 30% in a few days.

Congratulations to all those who were following our trades! ???

 

Forex Market Updates

Here are a list of various potential trading opportunities for this week, including AUD/USD, CAD/CHF, CAD/JPY, EUR/AUD, EUR/NZD, Gold.

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“I’m very new to trading and this training gave me a lot of important insights & strategies to become a good trader.” – Larry Tan

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“Very informative and interactive training conducted in a right pace.” – Eugene Chng

“A very complete training program that give a good coverage on trading and practical setups that are easy to understand and apply. The mindset portion is very important to ensure that we are profitable in the long term. Thank you.” – Alan

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Spencer Li

How to Trade the News (Especially When There is Too Much Market News)

how to deal with too much market news

Quite often, when we dive into the financial market, we find that there is simply too much market news. When we try to trade the news, we have no idea what is important or trivial, because we are so overloaded with information. This makes news trading quite an impossible task.

To make matters worse, we often get conflicting views from experts, with some being bullish all the time, while others are bearish all the time. And because some of them have pretty convincing arguments, we easily get swayed and our own opinions tend to fluctuate from extremely bullish to extremely bearish.

So what is the way around this?

The first thing you need to know as a trade relying on market news is to be able to differentiate between FACTS and OPINIONS.

Facts are like raw data, statistics, research from credible sources, economic data, etc. These are usually unbiased and come without opinions, and provide the basis for you to form your opinion.

Opinions, on the other hand, are views formed based on the analysis of facts/data, so there is inherent bias, and the conclusions drawn from the data may or may not be correct. Hence as a trader or investor, we need to zoom in on a handful of credible sources of good analysis.

The second thing you need to know when doing news trading is to “trade what you SEE, not what you THINK”.

Opinions often give you preconceived notions or views on the market, for example you might think that the market is bullish, and hence it should go up. However, in reality, the market may not move according to your opinion.

The only reality in the market is what we see on the charts, which is the price action of the market.

No matter how bullish you think the market is, the truth is that you will not be able to make money unless the price actually moves up. So when it comes to trading, your strategies, setups and analysis of the chart should take precedence over your opinions.

And that will help you filter out all the unnecessary noise in the market to zoom in on the best trading opportunities.

Enjoy the video, and remember to “like” and “subscribe”!

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Spencer Li

Market Analysis – Will We See Gold Hit $3000?

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After seeing negative prices in Crude Oil futures, will oil prices stay depressed, or will they recover any time soon?

With stock markets unclear, and the US dollar fluctuating wildly, is Gold a good long-term investment now?

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Market Overview

Will We See Gold Hit $3000

Looking at the “Daily Trend Analysis” on our Telegram channel, we can see that the most bullish counters are Gold (XAUUSD) and the US Dollar Index (USDIDX), whereas the most bearish counters are Brent (BCOUSD) and Crude Oil (WTIUSD).

The stock markets are pretty mixed, with most indices either being in a weak bear trend, or ranging.

 

Can Gold Hit $3000?

Can Gold Hit $3000According to analysts from the Bank of America, they now have an 18-month target of $3000 for Gold, which seems pretty bullish, considering we have not even cleared $2000 yet.

Normally, it is quite rare for the USD and Gold to trend strongly in the same direction, but we are seeing it now.

In the short/medium-term, since USD is a reserve currency, it is in demand when liquidity dries up, whoever with the aggressive money printing, it might decline in the long run.

As proposed by Ray Dalio, we are nearing the end of a 75-year debt cycle, which could see massive deleveraging and devaluation of the US Dollar. If that happens, then it will definitely be bullish for Gold.

This is the reason I have been actively adding Gold to my long-term portfolio.

 

Can Gold Hit $3000 2Normally, commodities tend to lag Gold, and eventually “catch up” once inflation kicks in, however this time demand is at an all-time low.

 

Can Gold Hit $3000 3Can Gold Hit $3000 4We have had great success buying the dips on Gold, and our most recent trading positions are already in the money. ???

Will continue to hold for more upside.

 

How Long Will Oil Stay Cheap?

Oil Stay CheapAfter seeing the May Crude Oil futures hit negative, traders are getting spooked for the June contracts, because they are afraid the same thing will happen if the lockdown is still in force, and demand remains low.

Looking at the virus numbers, the possibility is high.

 

Oil Stay Cheap 2Even if the lockdown does end, there is too much pent-up supply, and a lack of storage.

Hence prices could remain low or continue falling.

 

Daily Trading signals-1We have taken full profit on our crude oil shorts, and will not be taking any new positions for the time being, since many brokers do not allow new positions to be initiated due to the liquidity.

This has turned out to be one of the most profitable trades of the year. ???


< h2>Ranging Stock Markets

Ranging Stock Markets Lastly, for the stock market, I would say I am 65% bearish, and 35% bullish.

Since there are no clear signs, I will testing the waters with small positions, but will not be taking any large positions yet.

Stay tuned in our Telegram channel to continue monitoring the stock market for the right time.

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“Great course. I have studied about candlesticks and chart patterns before attending the course. However, not able to put them together to make consistent result. This course really stitch together and show me how to combine all the knowledge that I have learnt.” – Kyaw Zaw Than

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Spencer Li

Market Analysis – Oil Futures Hits Negative for the First Time in History!

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If you have been keeping up with the news, you will know that oil futures (May) have hit negative territory for the first time in history, and that has spooked the stock market as well.

Going forward, will this be the catalyst that causes another leg down in the stock market, or will we see the lockdowns ending soon, and the economy returning to normal?

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Did You Catch This Epic Oil Crash?

If you are wondering why oil prices managed to go negative, the reason is quite simple:

Oil costs money to store.

Due to the economic collapse, oil isn’t being used much.

So all the storage facilities are filled up. So nobody who can store it will buy it from you.

If you want to get rid of oil, you have to pay someone.

Epic Oil Crash

When oil was trading at $20, we were already short with a target of $10.

To be honest, I did not really think it could go that low, and was prepared to take profits along the way.

But sometimes if you get the direction right, you might get lucky and enjoy a windfall profit.

 

Epic Oil Crash 2

It is worth noting that only the May contract dropped drastically, while the June and July contracts remained much higher.

This means that traders are expecting some economic recovery (and an increase in demand?) in the coming weeks or months.

 

Epic Oil Crash 3

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Something interesting to note is the divergence between stocks and oil, shared by one of community members.

How Will This Affect the Stock Market?

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Comparing across different asset classes, we can see that crude oil and the 10-year treasury are bearish, while the long-term treasury bonds and Gold are bullish.

The S&P 500 is somewhat sideways, and has not decided which way it would follow.

 

Affect the Stock Market 2

Most fund managers seem to think that the recovery will be U-shaped, meaning we can expected a prolonged sideways movement in the stock market while the real economy takes its time to recover.

The second most popular option is the W-shape recovery, meaning they expect another leg down to test the prior lows. This one has my vote as well.

And lastly only 15% think a V-shape recovery is likely.

 

Affect the Stock Market 3

Based on what I posted last week, there are 2 potential areas which I feel offer a high probability short trade, and if prices manage to clear the 3000 level, then I will rethink the W-shape hypothesis.

Updates Regarding the Covid Situation

 

Covid Situation

Although the number of cases seem to have peaked in most major economies, and the US might want to relax its lockdown and resume the economy, there is a high risk of a second wave of infections, which might actually drive the second leg down of the stock market.

Also, the number of cases in developing countries seem unusually low, which is likely a case of not doing much tests. Hence there is a real risk that we might see an explosion of cases once the testing scales up.

Covid Situation 2

Now that things have started to stabilise, many countries are starting to point fingers at China for their slow disclosure of the virus, thus allowing it to spread globally and wrecking havoc worldwide.

This could lead to more global tension and conflicts going forward.

As you can see, there are always many exciting trading opportunities in the markets, and I think that another big move is coming really soon, so now would be a really great time if you plan to start learning about trading & investing.

Start Your Trading Journey Today!

If you want to learn, you might as well learn from the best. ?

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“I am more confident to trade better with the setups I have learnt. I confident to meet my goals if I take action.” – Joseph Benjamin

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Spencer Li

Market Pandemonium – Stocks Rebound, Oil Plunges, Gold Surges

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For the past few weeks, we have seen a strong rebound in stocks, but at the same time, we have also seen a plunge in Oil, crazy volatility in the USD, and a surge in Gold.

How can we make sense of this crazy market, when it seems like everything is moving in different directions? Does it mean it is risk-on for now, and is the market bottom already in?

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Due to popular request, I will be doing a 1-hour Facebook Live session which is open to the public, where you will get the chance to ask me any questions you have about trading or investing, or the current market situation.

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Market Pandemonium

Is the Stock Market Bottom In?

To be honest, no one really knows at this point.

After reading all the different articles, news, opinions and data, it seems the consensus is pretty split on this.

I also did a poll on Telegram, which seems to favour more downside.

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So is it possible that we are actually here?

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Let’s take a look at the arguments for each side.

Bullish case:

  • Slowing number of cases and hospitalisations after lockdown measures
  • Possible that lockdown will end soon and economy returns to normal
  • Unprecedented fiscal and monetary policies to boost economy
  • Only certain industries are hit pretty bad, the rest of the economy is still ok
  • It is a matter of time before a vaccine is found
  • China is already “back to normal” after lifting their lockdown

Bearish case:

  • Permanent damage to the economy – lost jobs, businesses shut down, loan defaults, etc
  • Less future spending – change of habits, less discretionary spending
  • Lockdown (full or partial) may last a really long time
  • 2nd wave of infections after lockdown is lifted
  • Domino effect of economy failure has yet to really kick in
  • Fiscal & monetary policy is insufficient to save the economy

 

How to Swing Trade the Stock Market?

If I had to put a number on it, I would say I am 60% bearish, and 40% bullish.

Based on this opinion (and of course studying the price action), my general strategy is to do short/medium-term bullish swing trades, while at the same time looking for an opportunity to take a long-term bearish trade.

This will allow me to profit from the short/medium-term price rebound, based on the price action, but also not miss out from the potentially bigger long-term move down, should it happen.

Market Pandemonium 4
From the chart, the strongest level of resistance is the gap around the 2900-3000 level, so if prices manage to close and stay above that, then I will reconsider my bearish hypothesis.

Tesla – Very Strong Price Rebound

After the sharp plunge when the stock price was almost hitting $1000, Tesla fell sharply to the $380 to $400 buying zone, which was the area I was planning to accumulate the stock.

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It had an amazing rally after that, and as of today’s closing it is up almost 90% from my initial entry price. Congrats to those who took the trade with us!

 

Crude Oil – Double Whammy Selldown

Crude oil was very unfortunately to suffer a confluence of bad news, including price wars, and a huge decline in demand due to restriction of travel.

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As price continues to drift down, we have seen the main exporters try to put together some deals and supply cuts, but the problem is that demand is too low, and even with a decrease in supply, there is still an increasing supply glut.

So unless we see lockdowns being lifted, and the economy going back to normal, we can expect crude oil to continue falling. This will get worse the longer the lockdown lasts.

 

Gold – The Hedge for USD

After seeing how the Fed (and almost every huge economy) is printing billions and trillions of dollars to save the economy, it is highly possible that we might see a devaluation of the US Dollar in the long-run.

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Market Pandemonium 8

For many traders and investors, they see Gold as a good way to hedge against the decline in value of the USD, which could explain the huge surge in Gold prices.

Thankfully, we managed to start buying in near the lows, and slowly accumulated on the way up.

As I mentioned in the post, I think this is a good medium/long-term trade, so for investors, you might want to add some of this in your investment portfolio as well.

Want to Start Your Trading Journey?

Here are some very practical trading tips which will be very useful, especially during such market conditions.
Market Pandemonium 9

 

In trading, it is important to find the right mentor and the right community, because having the right support is very important if you want to succeed as a trader.

Market Pandemonium 10

 

If you are interested to start your journey with our community, click on the link below: https://synapsetrading.com/the-synapse-program/

See you on the inside! ?

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