YES, YOU CAN
PROFIT
WHEN
THE
MARKET
GOES
DOWN ...
2 trading sessions
Feb 21 '23
6:30
March 7 '23
9:30
We have been at our desk since 6:30 watching the tape. For the last few trading sessions, we have been noticing that sellers show more conviction with a series of spike rejections, selling tails and lower highs. Other risk assets are showing red flags as well, such as AUDUSD (the Aussie currency).
As you will see below, clues for a trend day down were popping up early in the morning.
All of these clues were screaming "GO SHORT" ! You want to be AGGRESSIVE on TREND DAYS and not be fancy about trade locations.
You want to have confidence and average up (down trends) or average down (up trends) your position and manage your trades accordingly, knowing that you also have other uncorrelated trades in the market that partially hedge your positions.
Basically, a trend day looks like this (except it is 100% legit!) - you don't want to miss it:
Of course, we don't expect you to be familiar with all of the terms and concepts discussed below. That's why 8X Wealth is here to help!
Our training program is unique and it will significantly help improve your skills as a Super investor or Macro Trader!
So here it goes :
We looked to go short DJIA, to trade against our core long EQ position, on the morning Failed Auction, with a limit sell short order prior to the open but missed our entry. We moved on.
A morning Failed Auction (bull trap) is the first clue that we may have a trend day down.
The Linear Regression indicator is also leading the way down (red dotted lines).
Within the first hour after the session opens (9:30), the very negative Breadth (NYSE advancing and declining stocks) becomes obvious.
We select the Russell 2000 (Small Cap Index) as the best relative performance play for this trend day down since we expect a high number of retail investors will get caught on the long side. This can obviously add fuel to the fire.
Still no bids. No bounces. We get a bit impatient and go sell short market to have a position in as bounces are too shallow.
There is nothing better to feel the market than to have a position on, right?
We then looked up single prints on the Market Profile (left) and Wide Range Bars (yellow arrows) to aggressively add to our SHORT position.
We also noted the failed breakout of the 3 linear regression lines (yellow dotted lines) on the 30 second execution chart. Powerful !
No more news are scheduled for the rest of the day so participants are expected to remain bearish all day and odds are that the trend will accelerate in the afternoon.
We also expect RUSSELL to trade slightly lower the next morning, followed by a Z type of day.
We first pointed out the very high odds that the market would want to test the round number of 1900 and take down stops there.
We also pointed out that a bounce back to 200 SMA on our execution chart would be another SHORT opportunity.
We stay focused on reaching our target which is the 50 D-SMA. We expect an important range extension for the day, i.e. 1.5x to 2.5x ATR.
The Russel outperformed all other Equity indexes to the downside. We picked the right horse for the day.
Follow up the next morning:
50 D-SMA Target reached.
RUSSELL makes a quick tests below yesterday's low but price is immediately bid up by responsive buyers.
It now shows signs of a BUY DAY.
Obviously, we posted this opportunity in the trading room in real time, so you too can trade this ...
On March 7 '23. We were also preparing for a downtrend day, based on the Higher Timeframe structure.
Jerome Powell, the Federal Reserve Chair, was scheduled to address Congress for 2 trading sessions, starting at 10AM that day.
We placed our first short trade after the hearing started, on a push back up towards the moving average. Trade location was not great but there was no cause for concern.
We added a second unit short when buyers pushed prices to a better value area. In a downtrend, you will look to short a bounce back to the Moving Average. This second unit had a fantastic trade location.
We covered one unit near the lows of the morning and decided to trail the remaining short unit for the day.
We were looking to cover at the prior swing low on daily, at the 1875 level.
Breadth declined all day and remained under the 200 SMA most of the day.
It was clear to us that we would see a downtrend that day.
This gave us confidence to remain short for the day.
We closed our second unit at 1875.20 for a 20 point profit.
That same day, we also took partial profit on USDCAD when it popped more than 1%.
When we are not in front of our main computer screen, we can still watch the market action using Trading View on our smartphones.
The same technical indicators and alerts can be used on our mobile device.
On this chart, you can see 4 Wide Range Bars to the upside. They are highlighted with a yellow triangle.
WRB often indicate a short term swing high in a downtrend.
They highlight a good trade location to add to your core position.
