All daily articles with regard to the short term market movement will go here.
Two signals were sent in April. In the first, the limit price was just missed, after which the price still shot in the intended direction. Of course, we see this more often, there is a big difference between a "sideline analyst" and a trader.
In the second trade, the limit was indeed touched, but the price immediately dropped to our stop loss. Furthermore, we have seen considerable intra-day movements during the last few weeks. Sometimes these are so big that a position with a stop loss or a trailing stop loss will almost always be stopped out. And in addition, there are sometimes trading days on which the price immediately goes in one direction from the start, so that there is no nice intra-day counter-trend moment to take the position.
The month of May had a significantly higher daily volatility. On average, the ES E-Mini has a daily range from low to high of 1.6% In May, this averaged 2.8% This means that after the open buy or sell of a trade, there is a high probability that the stop loss will also be hit.
Furthermore, on many trading days, we saw that the futures immediately chose a specific direction from the opening. The trading method of the model portfolio is based on the fact that, on average, there is always some counter-movement intraday. In anticipation of that small counter-movement, a limit order is placed, but that opportunity thus occurred less frequently. The only signal that was sent had a limit price which unfortunately was not hit.
After a long time of mixed signals and/or difficult market circumstances, all signs were right to take this long trade. The previous day showed a significant rally into the close, the neural networks all turned bullish.
For the month of March 2022, the result is 0, there were no trades. This is just not the whole story because behind the scenes something did happen.
As you can read in the general description of the model portfolio, the method is such that the orders are entered as limit orders. Investors who enter the orders manually thus have plenty of time to do so as well. The auto traders, of course, have less work and can place an order with the press of a button. So after the order is placed, we have to wait to see if the limit is actually hit.
The trading results for February 2022 can be seen and are unfortunately negative. This month there were two losing trades which were both stopped out at the trailing stop loss.
It's been a few days, but this trade had yet to be posted. Once again it is a losing trade, but in execution, all went well. As always, the trading process is the most important thing, the profits will then eventually follow.
For trading on February 8th, the daily indicators looked very bearish, as well as the intraday indicators. So that justified the decision to plan a short trade. The usual plan in such a scenario is to sell on intraday strength to get those extra points.
Let's see what happened.
Dear traders, in the first month of 2022, the model portfolio has clearly made an adjustment in the trading method as already announced in the previous update. Due to a slightly more aggressive trading method, a wider stop loss, and taking current market conditions into account, more trades are expected to come. The trading edge in combination with a favorable risk-reward should produce a positive trading result after sufficient trades.
Another short trade was made, yet this time not successful. We waited for yesterday's volatility to slow down a bit after initial trading on Wall Street.
Overnight, the market was down significantly but it managed to dig its way out and posted well over +1% at one point. Looking at the daily indicator and intra-day indicators, a short trade was the most favorable trade to make at that moment.
Finally a trade! So many limit orders were never hit in recent months, but not this time. Last year's statistics show that a more aggressive trading style should give us more trades. Combined with the likelihood of our trading edge proven over the years, this should result in a higher net result (after adding up all winning and losing trade results).
Another important change was to gauge the market conditions only hours before the planned trade, maybe even just minutes combining the daily indicator with intra-day indicators. Let's look at what happened next.
The Greed and Fear model portfolio has had a difficult time finding good entries in the last 3 months of 2021. The market often left without us being there. As explained in many previous posts, the trick is to join after a pullback, but of course without hitting the stop loss. This proved especially difficult with higher volatility. Even when the volatility is average in percentage terms, in points it means a higher and higher amount because of the higher and higher prices. Fortunately, at least no losses were incurred in these last months.
What a difference only a couple of days can make. September and the first half of October looked like more downside was coming our way. As an objective measure, we could see several simple moving averages cross to a bearish mode where they didn't do that in multiple previous corrections. Daily ranges were on the high side compared to their long-term averages.
So this correction started to look more dangerous, but then in the second half of October, daily ranges began to decline followed by 6 to 8 up days and all the losses were completely recovered! The double top was taken out without any hesitation.
No trades were executed for the month of November either, but as is often the case, that is not the whole story. In fact, orders were placed, but they were not hit. As you may know from the advanced orders post, the model portfolio's trading method assumes certain average expected movements during a trading day. If these do not occur it can mean that a limit order is not hit, but sometimes it can also mean that a stop loss is hit earlier than expected. When in doubt about the current market situation, safety is usually chosen. This means that an entry limit order is sometimes placed further away from the current price or even no order at all.
The overall technical picture of the major indices is starting to deteriorate, as can be objectively seen from dropping moving averages like we haven't seen in a while. During times like these, it sometimes is a bit more difficult to find good entries and exits. But on average, the daily range of the ES E-Mini and S&P 500 have still been very moderate in September.