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Recently, we have seen huge volatility and huge moves in the market, which have confused many traders and investors, so in this blog post, I am going to take a step back and look at some weekly charts to give an overview on the market direction for various markets, including stocks, forex, bonds, commodities, etc.

While the first wave of sell-offs were mostly panic-driven, the next wave of decline would likely be driven by fundamentals.

Looking at this strength meter, we can see that the safe haven assets like the USD, Gold, CHF and JPY have performed the best, while commodity-related currencies like the NZD, AUD and CAD have fared poorly.

Here’s a video on how you can use this knowledge in your trading:

 

Daily Trend Analysis

To make things easier, you can also join our free Telegram channel to get a daily summary of trends and trading opportunities.
Click here to join: https://t.me/synapsetrading

 

US Dollar Index (DXY)

Despite the Fed cutting rates to zero, launching QE4, extending the repo program to $1.5 trillion, extending USD swaps to multiple central banks across the globe, and a potential $1-2 trillion fiscal package, actions which should technically weaken the USD have instead caused the USD to surge.

The reason for this is that about half of global trade is denominated in USD, and a lot of corporates and governments take up USD debt. When liquidity dries up, you will see people liquidating all other assets to buy USD, hence the tandem plunge in almost all assets, and rise of USD.

Looking at the chart, the USD has been on the rise since 2008, and as more businesses fold up, and liquidity dries up further, this could very possibly push the USD to new highs.

Thus, we can expect most currencies to be in decline relative to the USD, but to varying degrees.

 

Euro vs. US Dollar (EUR/USD)


The EUR/USD has been in a large uptrend channel for more than 40 years, and now it is hovering at the lower edge of the channel.

If the trendline is unable to hold, we might see prices head down to test the 0.8250 levels.

Currently, Europe seems to be one of the worst-hit regions, and this could cause lasting damage to its economy.

 

British Pound vs. US Dollar (GBP/USD)


The GBP/USD is also showing great weakness, breaking to new lows. It has been on a downtrend since 2008.

In the medium-term, we can expect a test of the most recent support-turned-resistance level of 1.2084, and if that holds, we will likely see a continued slide of this pair.

 

Australian Dollar vs. US Dollar (AUD/USD)

The AUD is one of the weakest currencies in recent times, and after breaking below the lows of 2008, we could see the AUD/USD heading to the next support level at 0.4873.

In the medium-term, we are likely to see a test of the most recent support-turned-resistance level of 0.6113, before it continues lower.

 

NZ Dollar vs. US Dollar (NZD/USD)


The NZD/USD is sightly less bearish than the AUD/USD, but it is also falling fast against the USD, and might be heading to test the next support 0.4905.

Currently, it has found some support at the 0.5596 level, so there might be some medium-term rebound or sideways movement.

 

US Dollar vs. Canadian Dollar (USD/CAD)


The USD/CAD has a huge pattern forming since 2008 that resembles a hybrid between a cup and handle pattern and a double bottom pattern.

Both are bullish patterns, which suggest that in the long-run this currency pair will continue to stay bullish.

In the medium-term, it has run into strong resistance and may take a while to break past that.

 

US Dollar vs. Swiss Franc (USD/CHF)


The USD/CHF has been on a long-term decline, and for the past 8 years or so, has been forming a giant rising wedge, which is a bearish price pattern.

The pattern had a breakout this year, but the USD has surged back to the covid crisis to test the breakout point.

I believe that in the long-term, the downtrend will continue, so I will be looking for good shorting opportunities once the USD demand starts to wane.

 

US Dollar vs. Japanese Yen (USD/JPY)


In 2014, the USD/JPY managed to break above the long-term bearish trend line, but instead of heading up, it went into a sideways movement for the next 5 years.

This pair is tricky to trade because it is rangebound at the moment, and both the bulls and bears are quite balanced.

In the long-run, we will need to see whether it breaks up or down from the consolidation pattern.

 

US Dollar vs. Singapore Dollar (USD/SGD)


Since the Singapore economy is very export-oriented, and perhaps because the SGD gets lumped in with other Asian currencies, it has seen much much weakening since the start of the crisis.

The USD/SGD has soared strongly to the resistance (prior swing high) of close to 1.46, and looks like it will be breaking that to test the next level at 1.5572.


I have taken many swing trades to ride this strong trend, which has been very profitable for me and my students.

Since I live in Singapore (and use SGD currencies), but the bulk of my investments (and warchest) are in USD, I have actually seen a 8-10% ROI on my whole portfolio just due to the gain from the exchange rates.

 

S&P 500 Index (SPX)


The S&P 500 has corrected to around 30-35%, in the steepest drop ever on Wall Street, and it has broken past the previous swing low in 2018.

There is no doubt that it will continue to decline, and various analyst estimates have predicted targets ranging from 1800 (which is the 2016 swing low) to 2200.

This suggests a further decline of 10-30% from current price levels.

Since I have bought in near current levels using about 20-30% of my funds, my maximum portfolio drawdown is only 10%, which is pretty much offset by the forex gains (from the appreciating USD).

So for those wondering if they should liquidate their portfolio now, here is some useful advice:

 

I was expecting a short-medium-term rebound of sorts, before the next wave of selling kicks in.


We started accumulating longs near the low in anticipation of a rebound, but the rebound fizzled out, so we only manged to make a small gain on our positions.


Originally I was expecting a small rebound (correction in price) due to the extreme oversold conditions, but if the bearish sentiment is so strong, it might just drift sideways (correction in time) instead.

If the lows of the 3-bar range are taken out on Monday, then we can expect the downtrend to continue, if not we might see a correction (either in time or in price) play out.

Either way, we are looking for a good opportunity to short, but the precision in timing is important.

US Long-Term Treasury Bonds (TLT)


While bond prices usually spike when interest rates get cut, the TLT had a spike, but it was immediately followed by a plunge, perhaps due to liquidation of bonds for cash.

Technicals-wise, it has broken above a bullish trendline, which could suggest an acceleration of the uptrend in the long-run.

However, with interest rates already at zero, it is hard to see what other catalysts might push it upwards, and we might see short/medium-term cash outflow for liquidity, and long-term outflow into stocks once the market bottoms.

 

Gold (XAU/USD)


Typically, Gold is supposed to act as a hedge against market declines, by having an inverse-correlation with the stock market.

However, this time we saw a sell-down in Gold as well, probably due to liquidation for cash as well.

On the chart, from 2013 to 2019, we saw Gold carve out a sort of double bottom consolidation hybrid pattern, before breaking out and surging up.

While the price action does not look good in the short/medium-term, I think it still looks bullish in the long-term.

 

Crude Oil


Due to a confluence of price wars (increase in supply) and a sharp drop in demand, we have seen the price of Crude oil drop sharply to new lows.

The next major support level is at around $10, but we will probably see some intervention before that.

 

Want to Improve Your Trade Timing?

If you would like to get daily trading signals delivered right to your mobile device in real-time (so that you don’t miss any opportunities), and have a dedicated group of like-minded traders to make money consistently together, then you should definitely check out our training program & trading signals bundle:
https://synapsetrading.com/the-synapse-program/

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! 💰😎🔥

Tesla recently posted a cash balance increase to $5.3 billion and reported a profit of $1.86 per share, shattering analyst expectations for a loss of 42 cents per share.

Elon Musk promised a 2020 rollout of a cheaper SUV and more self-driving technology to stay ahead of larger rivals rushing into the premium electric vehicle market he created.

 

 

Looking at the chart of Tesla, we can see that it traded between the range of $250-$390 for almost 2 years (mid 2017 to mid 2019), before breaking to test a major support level at $180.

From there, it has made a strong recovery, with a whooping 70% gain from its June 2019 bottom.

Now, prices are close to $300, and it looks poised to test the highs of $390 again.

I will continue to hold and look for opportunities to accumulate more again.

After more than 10 years of patient waiting and accumulating my cash reserves, I am finally seeing some possible signs of the start of a market correction.

If you have been watching my videos, you will know that my ultimate investing strategy is to wait for a big crash before going all-in to scoop up cheap stocks for the long-term.

Many people have been asking me if the crash is over, but since there is no consensus, things could go either way at this time.

 

General Market Trend:

This chart here shows the worst case scenario for the S&P 500 (weekly chart), and if the market really does go all the way down, then it will trigger the entry prices for many of my entry prices for the stocks which I intend to buy.

However, as prices are unpredictable, I plan to scale in and buy in bits and pieces, adding to the positions which I already have.

 

Let’s take a look at some of the potential drivers for 2019.

Bullish factors:

  • US policies to boost economy ahead of elections
  • Tech advancements to improve productivity
  • Brexit cancelled?

Bearish factors:

  • Interest rates increasing and more hikes to come
  • Trade war with China
  • Nuclear threat of North Korea
  • Brexit woes
  • Falling U.S. corporate profit margins
  • Record high U.S. corporate debt
  • Illiquidity in the U.S. corporate bond market
  • Extreme, costly climate events
  • A eurozone crisis
  • Europe needs negative interest rates to fight recession
  • Loss of jobs due to tech advancements and automation
  • High inflation in emerging markets

 

My preferred sector is the tech sector, especially after my 1-month trip to Silicon Valley last year.

 

Why Focus on the Tech Sector?

  • As more jobs get automated, the surplus gains will go to the big tech companies
  • Tech companies will expand by buying up the best of the non-tech companies
  • I read somewhere that in 10 years there will only be 100 companies, and in 50 years there will only be 10 companies
  • I prefer to pick the big ones because they will “eat up” the smaller ones

My Top Picks & Entry Price Levels:

  • Facebook (FB) – Entry price: $80
  • Google (GOOG) – Entry price: $750, $600
  • Amazon (AMZN) – Entry price: $1000, $700
  • Apple (AAPL) – Entry price: $130, $100
  • Microsoft (MFST) – Entry price: $85, $60
  • Netflix (NFLX) – Entry price: $200, $125
  • Tesla (TSLA) – Entry price: $250, $180
  • Baidu (BIDU) – Entry price: $130, $90
  • Alibaba (BABA) – Entry price: $110, $85
  • Tencent (700) – Entry price: $220, $170

Do note that these are the “worst-case” scenario prices, and it is quite likely that prices may never reach there, so I plan to accumulate along the way and add to my portfolio.

 

Other notable potential IPOs in 2019:

  • Slack
  • Palantir
  • Stripe
  • Airbnb
  • Lyft
  • Uber
  • Didi Chuxing
  • Toutiao

 

I am pretty confident the next wave of financial and economic gains will go mainly into the tech sector, with the focus on applications of AI, machine learning, data science into every aspect of our lives. The biggest winners will be those who own the algorithms.

That said, there will also be risks, such as increased regulation or anti-monopolistic backlash, which could negatively affect the stocks.

Good luck, and get ready to buy and hold for the next 10 years! 😀

Jesse Livermore is known to be the most prolific stock trader. Several books have been written about him and his trading track record is legendary. His profits were so great that he was reported to have owned mansions in various places around the world, each fully staffed, complete with limousines and steel-hulled yacht for his holidays.

Some of you might have read that Livermore was worth $100 million after shorting the 1929 great market crash.

Above: Some of the books about Jesse Livermore, available in major bookstores.

What Guidelines Did Jesse Livermore Follow As A Trader?

Among the many quips he had about trading and investing, I’ve picked out some of the key ones that could make or break your trading account.

While many complain about the difficulties in trading forex, stocks, or commodities, there is a good minority that makes consistent profits in the markets.

What sets Jesse Livermore apart from his peers?

 

  1. Buy rising stocks and sell falling stocks.

The above seems obvious, but many people fail to adhere to this rule. Many people like to ‘pick tops’ and ‘pick bottoms’. Now, professional traders do occasionally try to pick tops and bottoms, but they do so with very strict risk management, and always have a contingency plan for when the trade doesn’t work out.

Beginners often makes the mistake of trying to trade against the trend. While this can be profitable for some, talk to anyone in the trading industry and they will tell you that trend-following is the major money-making strategy that every trader uses. It’s simple, easy to add positions on, and it’s stress free. The problems come when beginners make a buck from trading with the trend, and start to explore ‘new ways’ to trade and invest.

 

2. Keep trades that show a profit, end trades that show a loss.

Jesse Livermore is famous for his humongous profits, but behind every profitable trader is the admirable ability to deal with a string of losses. It’s one thing to know that you need to cut losses, but it’s another to actually cut your losses when you are wrong. George Soros famously quips that it is not how many times you win or lose, it’s how much you make when you win, and how much you lose when you are wrong.

Cutting losses is a psychologically hard thing to do in modern society. We’re ingrained to be always correct, and never admit that you messed up, because it reflects badly on you as a person. However, with investing, no one is marking you for the number of losses; the profit that you make is the final report card that matters, and that’s where we want to be focusing on.

 

3. Never average losses by buying more when your stock has fallen.

Too many people refuse to be wrong on their investments or trades.

I have heard of people say this statement: “Even if the stock drops a lot, I’ll just keep it because I’m buying for ownership and dividend cashflow, not just for capital gains.” Sure, but what happens if the stock you hold drops by 70%? 80%? You’ll buy more?

Buying more when the stock has fallen is a sure-way to get your trading account to zero. It’s taking more risk when the odds are against you.

 

Think About This: Which of These 3 Guidelines Have Brought You Losses in the Past?

Many traders soon realize early in their career, that their trading accounts could have been profitable if not for silly mistakes. Avoiding these silly mistakes requires experience, maturity, the correct knowledge, and of course, proper mentoring.

I was lucky to be mentored by veteran traders early on in my trading career. Their advice, based upon thousands of hours of market experience, contributed greatly to who I am today, and I never fail to mention, during trading seminars or public events, that by tapping on their experience, I was able to quickly attain a level of success that kept me profitable.

If you’re currently struggling as a trader, ask yourself this question: “Which mistakes have I been making?”

Acknowledging trading mistakes is a continuous process of learning and growing.