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Recently I have been receiving a lot of emails and messages asking about the market, and also an unprecedented number of people joining my private trading network, and the obvious reason for this is that the markets now are offering excellent trading opportunities.

Heading into Bear Market Territory

Last Thursday, we officially saw the stock market enter the bear territory, with a 20% correction from all-time highs.

Many people tell me that it is impossible to time the markets. But is that really true, or are they just parroting something they read online or from a book?

Take a look at the 2 charts below. The one on the left is the chart I posted for my students on 27 February 2002.

Now take a look at how accurately it played out on the right, which is the what actually happened.

Now imagine if you had that roadmap on the left, how much money would you have made, or how much money would you have saved by liquidating your portfolio before the full crash?

How Much Did You Make from This Crash?

While most “value investors” or “long-term investors” are complaining about how badly hit their portfolios are, the truth is that the only thing they can do now is quote Warren Buffett and hope that the market rebounds in the long-run.

Eventually, it probably will, and I will also be buying in once the crash is over, but why would I want to sit through a crash that can be avoided?

And more importantly, why would I want to miss such a great money-making opportunity?

These past few weeks of steep declines have probably been some of the best trading days I’ve seen in my career, allowing me to more than double my trading account (ROI of +169.54%) in this short span of time.

This is probably more than most people’s one year salary. Yikes!

 

 

 

And I am glad to be able to guide my students (including complete newbies) during this period of time to generate awesome returns as well on their trading accounts.

Swing Trading Opportunities

With the market in such turmoil (and high volatility), there are going to be a lot trading opportunities on the intraday and swing timeframe, but you will need to have the right skills and techniques to trade these markets.

I would also recommend using smaller lot sizes to trade if you are not used to fast markets.

For example, in my trade below, I used a very small 0.01 lot size to take quick trades on the S&P 500, which allowed me to make US$671 on just one trade in a few minutes.

 

If you take a couple of such trades a day, and use good money management to pyramid or stack positions on strong setups, it is not hard to generate 5 figures a day in such markets.

Of course, these are not normal market conditions, and I do not know how long they will last, which is why we need to make the most of it for the next few weeks.

Roadmap for the Bear Market

Some of the common questions I have been getting:

  • How long and how deep is this correction going to be?
  • When is the virus going to peak?
  • When should I start buying?
  • What should I be buying?
  • Should I sell off my portfolio in case it falls more?

In my opinion, a lot of factors are hard to predict, and this crash is unique because it happened so quickly.

The 2008 crash took 18 months to correct about 50-60%, while this time we took about 3 weeks to correct 25-30%.

That’s insanely fast. some people have not even had the chance to panic sell yet. 😆

Although China has mostly managed to control the spread, and is on the route to recovery, many countries in Europe, Middle East and the US are still seeing and exponential increase in cases, so what we want to see is a deceleration of cases, so that from there we can estimate where the peak is.

If you look at the graph of all the past corrections in the S&P 500, there are only about 5 times in the past 55 years where it has gotten worse then this. (Also don’t forget to join our free Telegram channel for daily market updates if you click on that link.)

Personally, I do not think the bottom is here yet, and after consulting my charts over the weekend, I have come up with another roadmap for the next few months.

To be fair, I will only be sharing this new roadmap with my students, and I will continue to monitor the markets daily so that I can update them when I feel that it is time to start buying.

The Once-A-Decade Opportunity

Anyway, if you have missed the move down, do not despair, because the next big opportunity is the move up, once the decline ends.

Opportunities like this to multiply your wealth only comes once in a decade, so if you don’t want to miss this chance, I would like to invite you to join our private network with an awesome community of traders.

If you would like to avoid missing out on any of such awesome trades (which we deliver on a daily basis), then you should definitely check out our training program & trading signals bundle:
https://synapsetrading.com/the-synapse-program/

See you on the inside! 💰😎🔥

Last week, we saw the stock market decline for every day of the week, crashing about 15% from all-time highs, making it the sharpest decline in history.

This huge spike in volatility was excellent for short-term traders, and might also be an opportunity for bargain hunters looking to buy stocks cheaper.

I also made a short video talking about the different approaches to tackle the market crash:

The Start of the Decline

The first 2-3 days of decline was sparked after fears of a worldwide contagion of the Covid-19 virus, which saw a gap down on the S&P 500.

I started to post warnings about not trying to pick the bottom or to start buying, because I knew that a larger move was likely to come.

 

How Far Can this Crash Continue?

As the crash continued, I consulted my charts to plot a possible long-term roadmap, which would see a continued decline to about 15-20%, followed by a rebound and period of consolidation.

 

If there is a strong second wave of selling, we could see a larger sell-off to the bottom of the trendline, or the 200-moving average of the weekly chart.

 

At the same time, we also started initiating short positions on Crude Oil and AUD/JPY.

How to Catch a Falling Knife (Successfully)

On Friday, I predicted that there would be a rebound towards the closing, since there was no meaningful pullback after 6 consecutive days of selling, and also traders would likely close their short positions going into the weekend.

So I started accumulating long positions as the market tested new lows, and true enough, there wasn’t much further decline and even had a bullish surge into the closing minutes.

I took the chance to liquidate some of my positions to lock in my profits for the weekend.

 

Overview of Trading Results for Friday

Overall, it was a once-in-a-lifetime exciting chance to trade such volatility, and also a great learning experience for my students as we got to observe and discuss it together in real-time.

My trading portfolio booked a net 39.52% gain, with most of the profits coming from just 3 positions:

  • Short on AUD/JPY
  • Short on Crude Oil
  • Catching the bottom of S&P 500

 

Going forward, next week is going to be an excellent week for bargain hunting, and I have already posted my target portfolio allocation for my students so that we can be on the lookout for buying opportunnities.

If you would like to avoid missing out on any of such awesome trades (which we deliver on a daily basis), then you should definitely check out our training program & trading signals bundle:
https://synapsetrading.com/the-synapse-program/

See you on the inside!

I just got back from one month of travelling in Eastern Europe, and I’m glad to see some progress on the trade war resolution.

The US and China finally agreed on Phase One of the trade deal on Friday (Dec 13), including immediate cuts on import tariffs.

This is good news for Trump who is now battling impeachment, and with his 2020 reelection campaign coming up, he needs to give voters some small wins.

If this deal was not reached, a new round of tariffs on consumer electronics like cell phones and computers would have kicked in on Sunday.

As a sweetener, the US will also slash in half the 15% tariffs imposed on US$120 billion of Chinese goods that were imposed on Sep 1 previously.

However, existing tariffs of 25% on US$250 billion of Chinese imports would stay in place pending further negotiations on a second phase deal.

In return, China is committing to increasing purchases in four sectors: Agriculture, manufacturing, energy, and services.

In a sign that tensions remain high, Foreign Minister Wang Yi accused the US of “suppressing” China in a number of fields, including the economy, trade and technology and had “seriously damaged the foundation of hard-earned trust between China and the US.”

The US also angered Beijing by backing Hong Kong’s pro-democracy movement and criticising China’s mass detention of mostly Muslim minorities in the northwest region of Xinjiang.

Looking at the chart of the S&P 500, stocks have continued to climb even during the trade war, which shows that the uptrend is still very strong.

Now that we are at the top of the trend channel, we might see some correction to the middle or bottom of the channel.

If there are no major political surprises or escalation of the trade war, then we might even see a Christmas rally before the year end.

Overall, I would be looking to invest in high growth US stocks.

In the news, U.S. and Chinese officials are “close to finalizing” some parts of a trade agreement after high-level telephone discussions on Friday, the U.S. Trade Representative’s office and China’s Commerce Ministry said.

This seems to bode well for the stock market, with prices already creeping up to test the prior highs.

So will we see new highs? And how bullish are these new highs?

Unless there is a drastic turn of events, I am pretty confident we will see new highs.

However, the question of how sustainable these new highs are are more difficult to answer.

For example, there are other factors to consider, such as whether both sides stick to the agreement and the trade war does not escalate again.

There is also the Trump impeachment which is going on.

And there is also the softening of the US economy, which will also affect markets negatively.

So it is a matter of balancing the positive and negative catalysts, and deciding which are more important in the short-run and long-run.

Unfortunately, I am not seeing many long-term positive catalysts.

 

If you’ve been reading the news, you will know the US stock market is at an all-time high, and quite possibly one of the longest bull runs in history. According to Zerohedge, this is the longest bull run since the great pyramid boom of 2580 B.C.

Article: https://www.zerohedge.com/news/2018-08-22/longest-bull-market-great-pyramid-boom-2580-bc

Also, the US economy seems to be doing pretty well, especially with the booming tech sector, and even the banks are hitting record profits.

Article: https://www.zerohedge.com/news/2018-08-23/us-bank-profits-hit-record-60-billion-q2

But I think the big question on everyone’s mind is this:

 

Is this a Good Time to buy Now?

If you believe that markets follow the boom and bust cycle, such as the 10-year cycle, you will know that we are “overdue” for a big correction. Logic dictates that we aim to buy after a big crash to get the best value (and most potential upside), hence buying at the all-time highs might not seem like a good idea to many people.

 

If you look at the current chart of the S&P 500, you will see that the price is just testing the prior highs, which means that it is at a very critical point.

If prices get rejected at this level, it could end up forming a double top reversal pattern, which is very bearish and could see a decline to the 2280 levels.

For the strong uptrend to continue, prices need to confidently break above the prior highs and stay above that level.

 

What Could Go Wrong?

With escalating political tensions with many countries, and the trade war with China, a confluence of negative factors could adversely affect the fundamentals of the US economy.

Article: https://www.zerohedge.com/news/2018-08-23/trade-war-escalates-us-china-slap-each-other-fresh-16-bn-tariffs

With the risks in mind, I will not be aggressively accumulating positions at this time, and will have to focus more selectively on key sectors.