Market analysis, insights and trading ideas on various markets and products!

Spencer Li

Picking the Bottom for Bitcoin & Ethereum – When to Buy?

2017 08 25 17.17.38

Recently, Bitcoin prices have crossed $4,800, and year-to-date, its price has surged nearly 400%, making it one of the best investments for the year. And it is not alone.

Other cryptocurrencies, such as Ethereum, have also been making new highs, and many more new products are hitting the market every day.

Which is why many of my friends, followers, and students have been asking me a lot about theses products, and most importantly, “when is a good time to buy?”

 

Sharing live on #cryptocurrencies like #bitcoin and #ethereum ? Are you ready for the next big thing? #visionaryinvesting

A post shared by Spencer Li ?? Synapse Trading (@iamrecneps) on

When I first started trading, I was mainly doing stocks and CFDs, and I developed my “15 minutes a day” price action strategies for these. And as I expanded to new markets, I was pleasantly surprised to find that the same strategies worked perfectly well. To date, I have used them successfully on forex, futures, options, and most recently, on cryptocurrencies.

This means that for a new product like Bitcoin, which behaves very similarly to IPO stocks or some less popular penny stocks, its behavior can be best understood by studying its underlying price behaviour.

Many people who take one look at its prior meteoric rise will immediately come to the conclusion that is it near its high and too late to buy. But many people probably thought the same way about Apple and Tesla’s stock a few years back.

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Hands-on analysis and study of Bitcoin chart for precise timing (at my new cafe)

 

This means that there is potential for cryptocurrencies to go much higher, but how do we time our entry into something that is moving so fast?

Turns out we do have the perfect strategy for that, which is similar to the strategy we use to enter fast-moving counters in times of a strong trend. In fact, I pointed this out using the chart of Bitcoin during my last few workshops, and also at Invest Fair.

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Snippet from the “Synapse Network” private forum (posted 24 August 2017)

 

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Bitcoin chart today (04 September 2017)

 

How far can this trend continue to run?

To be honest, no one can really tell, but all I know is that whenever there is a good buying opportunity, I will continue to add more positions to ride this strong trend until it ends. And when it does, I will get ready to short it down as well. 😀

But that is a story for another post.

Till then, trade safe, and aim big. Cheers!

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Spencer Li

An Exciting Week of Trades – AUD/CHF, EUR/USD, NZD/USD, etc!

2017 06 16 14.54.02 1

Last week, we had some pretty decent trades in, netting close to US$2,000 in profits for a handful of quick trades, riding on the strength of the USD after the FOMC.


An Exciting Week of Trades

An Exciting Week of Trades 2

An Exciting Week of Trades 3

 

Also took the chance to check out my new house:

 

For those who are keen to join our private network for timely trade calls, you can reserve your spot here, but do so early, as we only allow 20 new people to join each quarter!
Register: https://synapsetrading.com/the-synapse-program/

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Spencer Li

Why I am Planning to Liquidate my Full Portfolio of Singapore Stocks

straits times index sti 140517

 

It has been a while since my last update on the Singapore markets (as well as my SG portfolio holdings), largely because the market doesn’t move much, so I only check on them once in a while.

Interestingly, I noticed that the STI has had an impressive run, coming off a low of 25xx to break past the 3000 level in the past few months. However, is this move sustainable?

Full Portfolio of Singapore Stocks

Taking a closer look at this weekly chart which shows the historical prices over the last 20 years or so, one thing which stands out is that the market has been in a 7 YEAR sideways stagnation.

If we look back at the whole history of the index, this is somewhat unprecedented.

Which could explain why popularity in this market (as well as trading volumes) has been waning. In short, it does seem like a dying market.

Not to mention that during this same time period, the US stock markets have been steadily creeping up.

If we look at the most recent red shaded circle, that is where the current price is, and it seems to be running into massive headwinds. This means that the potential upside could be quite limited.

If we observe the large sideways range that prices have been moving in, the price is now at the top of the range. And we know that the best strategy in a range is to “buy low, sell high”, which means that the odds do not favour much more upside, unless there is some new strong positive price catalyst.

However, a cursory glance at recent news headlines seems to be painting a rather gloomy picture, with muted growth forecasts and ominous employment statistics. This tell me that downside catalysts are more likely that upside ones. In other words, there is more chance of a negative shock rather than a positive shock for prices.

In light of all these factors, I am planning to cash out most or all of my profits, and wait for more favourable odds to redeploy my capital. As a trader and investor, timing is always key.

Good luck, and trade wisely! 😀

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Spencer Li

Long-term refinancing operations (LTROs) – Long-term time bombs?

Long-term refinancing operations (LTROs) involve the central bank lending money at a very low interest rates to eurozone banks, which has led to the term “free money.”

The injection of this cheap money means that banks can use it to buy higher-yielding assets and make profits, or to lend more money to businesses and consumers – which could help the real economy return to growth as well as potentially yielding returns.

Banks can use assets such as sovereign bonds as collateral for the loans – although they can no longer use Greece’s bonds as collateral after the country was downgraded to a default rating by Standard & Poor’s. This has helped to boost some of the more troubled sovereign bonds, in peripheral countries such as Spain and Italy, as their yields have fallen because they are being used as collateral for the operations.

This can help out the entire country. Spanish and Italian banks, the biggest buyers in the last operation, used their holdings of their own sovereign bonds as collateral for the LTROs. This helped reduce sovereign bond yields, which were threatening to stay at unsustainable levels that would make debt repayments impossible.

In previous auctions, the money usually had to be paid back within three months, six months or 1 year. The ECB’s launch of three-year LTROs in December meant that this time scale was extended, which helped cause a much greater takeup than usual.

– references: CNBC


The question is, what happens after 3 years?

Unless the Euro zone countries can miraculously turn their economies around in 3 years, the problem has just been delayed by 3 years. If the banks choose not to loan out the cash, they can simply use the money to increase their returns via investments, which does not benefit the economy at all. Also, where does the ECB get this cash from? It will need to pay back the cash one day, or risk the devaluation of the Euro, similar to what the US is facing now. The collateral used are the sovereign bonds (which no one wants to buy in the first place), and should the countries decide to default, the ECB will be left with a lot of useless junk on their hands.

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Spencer Li

Simple chart-reading can tell you all you need to know

Leonardo Da Vinci once said that simplicity is the ultimate sophistication. Let’s take a moment to ponder that. This applies to research analysis as well. When you hear people talking about some sophisticated trading system or some flashy indicators or some complex wave projections, think again. It is more likely to be smoke and mirrors. All these tell you nothing new if you know how to read the bare charts. It’s as simple as that. Simple, and yet sophisticated. Looking back at my last few stock picks, I found that it is possible to read and understand what is happening on the charts. This makes it possible to pinpoint the low risk entry points, as seen in some of my previous posts.

https://synapsetrading.com/dbs-are-the-banks-leading-the-decline/
https://synapsetrading.com/noble-group-evening-star-signals-turn-to-the-downside/

Compare that with indicators. If you see a green arrow, do you know why it is a buy? Maybe it worked the past 3 times, but will it work this time? Maybe. Or maybe not. You won’t know. In fact, you won’t have any idea why there is a green arrow. You won’t know what is happening in the market. You won’t know what the smart money is doing. That is why chart-reading is an important skill everyone should master. Banks, funds and proprietary trading firms use it as their main tool. Maybe you should consider it too.

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