Newsletter: 11 June 2023
What’s Going On:
US Stocks Hit 10-Month High
The tech-based US index, the NASDAQ, is already at its best levels for more than a year and last week saw the broader S&P 500 trade to its highest for 2023.
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I’ve been waiting for this to happen and it confirms the recovery is strong but there is a potential problem area worth watching where perhaps this market could struggle.
S&P500: Daily Candles
If you watch the various YouTube live streams I have done throughout this year, you will know I have been positive on US stocks and expecting the recovery to continue. It’s a message I have stuck to in the daily WhatsApp group I run where I talk about markets I am watching on the day and my biggest winner so far this year has been staying long and buying the dips in the NASDAQ.
The S&P500 index is another favourite of mine and this has been rising – but has been lagging a bit compared to the NASDAQ. However last week saw the S&P at its best levels since August 2022 further extending the recovery that started in October last year.
S&P 500: Problem Area?
What’s interesting for me up here is those August highs at 4325 were quite the turning point back then. It was a bear market top for the S&P and the index then dropped almost 20% over the next few months. I don’t think the same thing will happen this time around – but I need to have an open mind and I do wonder if there will be some market nerves now the index is back up at these old highs. I would not mind a sell-off and would once again be a buyer of the dip.
It’s a big week for announcements and the major one I will be watching is the latest US interest rate decision on Wednesday. No change is expected but as usual that doesn’t mean that markets will be quiet.
Trading Tip:
Patience is A Virtue
Some of my biggest winning trades this year have been in the US NASDAQ stock market index. I’ve been expecting a recovery this year and there is one trick that has worked in my favour something that many losing traders do not appreciate.
And that one trick?
TIME
I have been in one of my NASDAQ trades since 14 February and here we are nearly 4 months and 2,000 points higher.
NASDAQ 100 Index: Year To Date
I spent most of the last 20 years my career in the trading industry and was really surprised to learn that almost 50% of trades are closed within the first hour. I think this is another example of losing traders shooting themselves in the foot.
They just don’t give the trade time to develop in their favour.
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Just take a moment to think about this. Let’s say you have decided to buy gold as you are expecting a decent move up. What are the chances that you have nailed the exact correct entry point to that sort of accuracy? If you look at my NASDAQ trade from mid-February, it went against me for a couple of weeks, then sold off and didn’t really start moving for more than a month.
If I am in a profitable trade, I really want to try and stick with it and gain as much as possible from the move.
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The vast majority of traders are too keen to snatch at profits, owrried that the market will take them away. And of course, the flip-side of this is they are reluctant to close losing trades, hoping that the market will turn around.
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We have to change our mindset: run the winners, cut the losers. Easy to type, not so easy to do - which is why more than 70% of those who try trading typically end up losing.
WhatsApp Group:
Open To All
Earlier this year I started a WhatsApp group for those who had attended my trading course. This was designed to be a channel where I would update my thoughts on the markets every day and answer any questions. This is now available for all to join.
Here’s a screenshot of a typical update from me – this was last Thursday. I talk about trades I have open; trades I am thinking about and other interesting markets.
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If you would like to try the WhatsApp group for a month to see how it could help your trading approach, then follow this link, select WhatsApp Group and use the code EMAIL for a 20% discount off the first month’s subscription.
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That's it for this week.
Good luck with your trading.​
​David