The boring market report – December 14th 2020

The invention of fire

Anaximander of Miletus, a Greek philosopher who lived in the 500s B.C.E. speculated that humans must have descended from some other type of creature, most likely fishes. This idea became later a scientific theory when Darwin wrote about it. But it still is a theory, because these days, no new species arise on earth, maybe man will change into superhuman with exoskeleton and additional processing power, but still is a man, form fit and and function wise! A counter theory is that at some point in time, a disruption occurred, allowing for instance more radiation from the Sun or stars on brain cells, that allow the monkey to become a different specie: the man! Don’t tell anyone I told you about this one ;-))

When a company changes so that it is not the same as before, because it has been eaten by a bigger one, or they invented a disruptive technology, it is not usually a smooth process. The new company may not have children (or clones) on its own because the market timing was missed. Or it may thrive in unusual manner and explode, what we call bubbles. This is exactly what we can observe and measure on our charts. Well, seems I have demonstrated life on earth is actually the output of a random process!

If you want to make money with trading (I did not say investing which is an other subject), you need board a ship that is willing to go northern direction. A disruptive technology is the right vector to use. Because, when something has the potential to disrupt, then it is attracting attention of big money, and you need to follow this track. If you are sticking to old business, then your gains may not outweigh your losses.

While I am it, instead of complaining of inefficiency of government in managing virus crisis, take time to think about disrupting something in a gently way. Become expert in one domain, then explode it with new concept, and sell you concept to make big money!

Now let’s look at the market and their disruption potential!

I will explain in future post about the usage of pitchforks. When you master many trading tools, you should change from time to time to avoid analysis being a boring task. So S&P500 escaped from a down trending pitchfork, thereby generating a buy signal. The MACD at the bottom being in positive area, and price being above moving averages, this was a good signal to check whether index was waking up from the horizontal move. Which it did! The slope looks good, we can stick with the market. Careful about any divergence with MACD… nothing to fear for now!

I am more concerned with Nasdaq. I is right on the 3-months objective and MACD is now lower than beginning of September. This is a divergence! Should you hold major index contributors, like Apple or Facebook, would be good to watch closer to market behavior and secure some gains!

Bitcoin is still pleasantly flying in the 10R area, 10R means it is 10 times the Risk I took when I entered beginning of October (stop under yellow zone). I have taken partial gain and will come back to it later. As long as MACD is positive, I am keeping a small line so I won’t miss out the beginning of next rally (the famous FOMO) and then I will add more to the line when the rally is confirmed!

Telsa has landed (pun intended after Starship issue!) me a cool 40% of gains without leverage. Same divergence as Nasdaq. I will wait lower!

That’s it! Until next time, trade disruptively but safely!

The boring market report – October 28th 2020

Looks like the markets do not welcome this second coronavirus wave, not the wave itself, but rather the bad and worst decisions made by politicians! You should never panic because of sudden but announced meltdown, and again stick to our sound models!

S&P500: this will be the last time I am using these reaction lines (drawn end of March!), as the accuracy for top prediction is now failing. No big deal. Always double checking what the random walk model is telling me.

Following previous post, you see the MACD has been under its signal for a while, indicating downside pressure. First objective is 3094, due after the US elections, so another 10% to go. If might go further down, pending on lock-down conditions, as they say. The truth is that the market will go up if there are buyers, lock-down or not! If investors think all the GAFAM will be at bargain price when S&P500 reaches 3100, then market will resume up trend.

The SOX (or Semi-conductor Index) usually anticipates what’s coming up. No light to expect for now, as there is a divergence with MACD.

Speaking of Apple, the kagi graph is showing interesting things. A 3-buddhas top appeared by mid-September but because of strong uptrend, I deferred my idea of shorting Apple. Then a double window bottom has formed, a strong indication of further uptrend. Markets may be in bad mood for next few days but quarterly results may bring back confidence! Remember that the recent growth of Apple is before all due to buyback, a gift for shareholders who don’t get too much dividends otherwise. You might be bullish because of the upcoming 5G trend on smartphones, but this stock is overvalued somehow. The question is compared to what? There is no absolute reference!

Gold has reached its downward objective end of October but may still go down some more, which is very good opportunity to buy. Rationale: as countries are printing more money by tons, the value of money goes down, and Gold which is limited in quantity can only go up!

I wrote two weeks ago you should look at Bitcoin. It has gone up almost 20% already. On the way to 100k$!

That’s it! Until next time, trade carefully!

The boring market report – October 15th 2020

Amid sad jobless figures and coronavirus new travel restrictions in Europe, markets may be in a strange mood but money flows by billions in stock market because bonds have ridiculous or negative yield. Interesting? No. This is noise. All this does not explain why you, as an investor, will pull the trigger to buy Apple or Tesla stock. Those so-called correlations between news and market are complete non sense!

Let’s go back to our sound mathematics based trading!

S&P after crossing reaction line in now back up, see how good those reactions lines to find bottoms (which you can’t play of course!). As explained in yesterday’s post, new 3-months objective is 3672, we are already 6-steps from the bottom, which is quite good. Indeed the tail winds may push prices horizontal for a few days, but next reaction line is far away, do not expect a reversal in the short term. No need to say you need a stop anyway, this is trading, not betting on the wind direction!

Tesla, after hitting twice the reaction, has gone through. Next one is very close, so better be careful!

Bitcoin: does anyone care about Bitcoin anymore? Maybe you should! Next objective is 13230$, which means the gain for 2020 could be close to 100%, compared to current 10% on S&P500, before the US election…

That’s it. Until next time, trade safely!

The boring market report – October 5th 2020

Sorry it has been a while since last post, I have been busy with the Cozy Dragon Research team about their discoveries. Digging in the data, and starting from the fact that Gaussian distribution is a scam for stock market data, many doors keep opening in the way we analyze this data. Exponential distributions are key of course, but even then as we focus on longer time analysis, we find that data is spread is in many populations, themselves are within an exponential distribution! There is therefore a fractal statistical Laplace structure. We can identify clearly what some call the smart money, then the money of everybody, and it all reflects the opinion diversity…

Let’s stop on that and come back to real market, where our goal is of course to make as much money as possible!

Unlike those waiting for Fed money, we want to profit from market meanders. The proximity of US elections, and Trump having caught COVID-19, and … Nothing gives us better indication that mathematics.

We left S&P500 between the last 2 reactions lines, and I told you it was mirroring the end of summer 2019. The move was much more violent this time but as you can see it ended exactly at next reaction line. The weather should be more quiet from now. The trend is of course still very bullish.

Nasdaq is same configuration. Those would wanted a strong correction will need to wait some more!

Our friend Tesla is blocked by a reaction line but bulls are still pushing to go through.

We can not anticipate of course what the many investors have in mind. Maybe Trump will recover from the virus and win in a landslide, in which case, the bull market will continue and take a deep breath after November. Maybe Biden makes it to the White House and many will go short on the market. A down wave is surely to be expected, but the exact timing it is starting is the biggest question. Not just now…

That’s it! Until next time, trade safely.

The boring market report – September 4th 2020

It had to come, it is there at last. The correction!

Yes, we can take this opportunity to go after Tesla or Apple, …. but we need to wait for markets to go back up again.

The current correction mirrors a messy period from August 2019, as highlighted by the orange circles. Of course, the trend is still up, but market will continue to be jumping up and down until next reaction line!

Situation is a bit more tricky for Bitcoin. Price targets are reached as usual on warning line levels, you just don’t know which one prices will stop at. Price target for the down move are 10250$, 9400$ and 8600$. Up trend will undoubtedly resume then as many professionals advise to buy some to protect yourself from the (virtual) printing of dollars by billions!

Gold is still above its random path, so we assume horizontal consolidation for now and we keep buying some more, for the same reason as Bitcoin.

That’s it for today. I will cover new subjects over the next weeks, from portfolio management to more technical or philosophical subjects. I will propose a tiny portfolio (10k$, 3 lines or technical volatile stocks) which will be updated on weekly basis.

Until next time, trade safely.

Gone fishing…. The boring market report August 5th 2020

I have plenty of subjects to discuss in September and later. I want to spend three weeks far from Internet, the worldly (bad) news, … I will monitor my open positions, but not much more. I will not validate the hundreds of comments that I have undoubtedly when I come back!

S&P has gone through the last reaction lines quite harmlessly. Next one is not drawn yet but is much further away. This rally can continue for a while, unless something wrong happens! Your stop should be around 3100.

As written some time ago, you ought to have gold. Dollars and euros are printed faster than trucks can transport them where needed, so their value to the good old Gold is going down, so Gold goes up. Turbo has even been clenched for the pleasure of traders and investors alike.

If there is something that has been very pleasant these last days, it is the post-halving Bitcoin rally that has started. At last! Many other cryptos either anticipated (Etherum) or are following (Litecoin, Ripple). My portfolio shows massive gains in just a few days, and it is very likely that the rally will extend for a long time.. for the same reason as Gold!

You need to monitor the progress of virus and countermeasure applied in each country to anticipate a possible slowdown on stock market. Gold and cryptos may or may not correlate with stock market like during containment. Each needs specific attention.

That’s it. Until September, trade safely. Stay away from virus and wear a mask if needed: it is only a matter of probability, you are decreasing the chances to get sick. So be bullish on masks and bearish on the virus!

TTYL

July 27th 2020: Will S&P500 go through?

S&P500 is stuck behind the reaction line. It can go through or slide down along the line. Again, see how reaction theory does not predict where market is going, but tells you where market may be in trouble, and that is more than good enough! Just have a stop at 3040 and do whatever you want with your day!

The boring market report July 23rd 2020!

DragonTrader is still on vacations until end of August, but market commentaries still come for another two weeks. Totally free as usual!

S&P500 has crossed blue down sloping reaction line since last post. The money is still flowing in, so I would not be surprised movement still continues for a while. Should it reverse during my August vacations, please alert so everyone can profit from a little short!

As the Fed is printing lots of money, it flows in the stock market but also in Gold and possibly some cryptocurrencies as well. Diversification? Possibly. Or you need to see the other way round: as you print more money, the value of money decreases, so price of Gold goes up! Volume of available gold does not change a lot year over year, and countries wealth (GDP) is going down due to little virus, so gold is safe harbor! See, if dollar has been disconnected from Gold more that 45 years ago, people still think in gold terms!

It is even better for Silver, but you need to ask a drunk economist reason for this strong uptrend!

I was moderately bearish on Bitcoin but the graph starts to show something different. First, the money is flowing in as shown by accumulation distribution indicator and there is now a hidden divergence with WAD. Makes me think that an up move is possible, the post-halving rally everyone has been expected for a while! Tip: look at Ethereum, might be even more interesting!

That’s it. Until next time, trade safely!

The boring market report July 15th 2020!

Dear readers, passers-by and friends,

We are middle of the summer and your goal is to get rest, enjoy the sunshine, get enough sleep and stop worrying about nothing.

I got very genuine comments over the last months, most positive, and overall very motivating. Now I see many comments copy / pasted while changing one word by an other, but since I have elephant memory, I remember every comment written previously. Please take a little time to think before writing! I also enjoyed the worst comments a blog can get “you text is so full of misspelling that it is not readable, I am very disappointed” (sic, I had to fix the spelling): you are excluded, man, do not come back!

Let’s get back to market summer conditions. S&P500 is about to reach the 2 downward sloping reaction lines. Will it go through unhurt? We will know in coming days. I have moved my stop up to 3050.

Bitcoin is also lazily resting on the random path. I am an unconvinced bear, eying at the bottom indicator to come back up the zero line. Wait and see!

Gold (or even better Silver) is the place to be for now (outside stocks). No cloud in the horizon, for a golden suntan! A stop at 1750$ seems a good idea to me!

That’s it. Until next time, trade safely!

S&P500 Market analysis June 30th 2020

S&P500 is still hesitating where to go, bears are now predicting a new market crash because of a stupid virus that can not be kept under control in the US and bulls are thinking that Fed is standing, ready to do whatever is needed to sustain the markets….

I introduced the Ferrari trading tool in previous post. As you can see, we reached also the red zone. Either you jumped out at that time or… your stop is taking care of securing your profits, especially should the trend continue, you are ready to drive it along!

With a stop positioned at 2956, you can switch off your screen and enjoy the sunshine!

Talk to you later!