Advised #12: Choppy markets are expected around these cyclical structures
3 things to know before May ends so it's clear that this is a long term bear market and everyone understands how the money is made
Its best to bet bigger on your trades such as those that are in agreement with the cycles of a longer term nature, like a 40 week cycle short trade such as that which started April in $NQ. This is where the going is tougher, because the game is getting weirder. Heres my plan that you can live by and I swear it keeps me out of trouble... “DON'T TRADE” or you can opt to use credit spreads for current income to be super safe at turning points such as this, where an 80 day peak comes in the first 20 days. The profits are lower in return for less transaction risk. But weekly options credit spreads using ATM strategies linked to cyclical concepts is powerful. For instance, going forward, if a stock continues to fall below the previous day and the 2nd most previous day, then it will just keep going more than likely for bigger profits.
It is far better to leave the desk and do something fun than to struggle with whether to enter a trade. If you are struggling.. You're overtrading and its not worth wagering under that type of duress. The more a decision to trade causes the trader to lament, sweat and ponder.. The worse the odds are for that trade at that moment. You cannot stretch the strategy to feel more confident. This is the main reason traders fail. They forget to control experimental variables for only testing one strategy until it can be verified. The trader often introduces rules and other strategies in error.
In short term cycle dominated markets like these on US equities, its often difficult to pin specific troughs, but I think $SPY is currently moving into a 40 week trough in July. I think it moves down quite a bit into the next 80 week cycle low in 2024.Again, options can be used to find scenarios that are fit for the markets presented to us. I think that the professionals are also doing this now, they are going to clean up with short term cycles. Additionally, a deep and fast trough will cause a big push on commonality as all stocks are bought at once at a low price. A stair stepper trough is beautiful as well and its what I believe we are seeing. These 2022-2023 moves are going to look like short term cycles up and down, with panicky short term trades on smaller cycle periods. Because of the averaging of bets by the large player.
Special Plan for Time Off
The best thing to do as you wait for the next shorting opportunity is to enjoy time away from the markets. It is an enormous cost to ones health and vitality to always be pegged to the market trying to earn a profit.
My goal has always been to show Advised Traders how to trade the plan appropriately. And in my experience, equities markets don't respond well in this current time period where longer and shorter cycles are conflicting. This comes from years in the market. The bonus of knowing where the market is helps with planning when to do other things.
The scans will show the way when there is a turn down in the market.