Fuck It Friday: The Seven Day Scope (Snipers Only) Free Weekly Report

Equity sentiment/Commodities on MAJOR support zones and equities catching a bid, let's dig in.

Source: Alphatrends

TLDR summary: The initial insight this week that we might have reached a peak in fear and could see a rally has proven correct. Trading, especially in the early years, is a profound psychological journey marked by daily highs and lows.

Key insights from experienced traders underline the importance of emotional discipline:

• Warren Buffett emphasizes being cautious when others are greedy and bold when they're fearful.

• Jesse Livermore warns that trading is not for those who cannot maintain emotional balance, as it can lead to poor financial outcomes.

• Benjamin Graham and Charlie Munger highlight the dangers of greed, advocating for patience and emotional mastery as essential components of successful investing.

• Peter Lynch points out that not everyone has the temperament for trading, suggesting that those prone to panic should steer clear of volatile markets.

The week's technical indicators and market movements suggest a cautious optimism:

• A pattern where a close below and then above a specific line predicts a rally, but closing below a more critical threshold suggests deeper issues.

• Positive trends in the NYSE's weekly highs/lows and a robust buy signal in the NYAD Bull/Bear indicator.

• Questions about future growth remain, with intermarket models signaling a slowdown, although this is not definitive.

Commodities, with the Fed likely cutting rates and the weakening dollar, there's a bullish outlook, though strategies may need adjustment based on ongoing market assessments and the upcoming COT report.

Fear or Greed

So far the call earlier this week that we may have hit extreme fear and we may rally out of it has been correct. How long does it last?

The first five years of trading felt like an emotional rollercoaster, with highs and lows every single day. I wanted to quit, outwork everyone, learn everything, and at times, it felt overwhelming to a point that I can barely describe. I had no idea that trading would be such a psychological journey—I thought it would be a straightforward path, just about learning how to trade. I didn't realize that keeping my emotions in check, sticking to my systems, and maintaining a level head would be a constant challenge. It felt like living in the perpetual tension between fear and greed.

• Fear:

  • Warren Buffett: “Be fearful when others are greedy and greedy when others are fearful.”

    • Explanation: Fear often leads to panic selling, causing prices to drop. When the majority are fearful, it might be an opportunity to buy undervalued assets.

  • Jesse Livermore: “The game of speculation is the most uniformly fascinating game in the world. But it is not a game for the stupid, the mentally lazy, the man of inferior emotional balance, or the get-rich-quick adventurer. They will die poor.”

    • Explanation: Fear can cloud judgment and lead to poor decisions. Staying calm and balanced is crucial for successful trading.

• Greed:

  • Benjamin Graham: “Individuals who cannot master their emotions are ill-suited to profit from the investment process.”

    • Explanation: Greed can push traders to take excessive risks, often leading to significant losses. Mastering your emotions, especially greed, is essential for long-term success.

  • Charlie Munger: “It’s waiting that helps you as an investor, and a lot of people just can’t stand to wait. If you didn’t get the deferred-gratification gene, you’ve got to work very hard to overcome that.”

    • Greed can make traders impatient, pushing them to chase quick gains. Patience and discipline often yield better results.

• Fear and Greed:

  

  
  

  • Peter Lynch: “Everyone has the brainpower to follow the stock market. If you made it through fifth-grade math, you can do it. But not everyone has the stomach. If you are susceptible to selling everything in a panic, you ought to avoid stocks and mutual funds altogether.”

  • Successful trading requires balancing fear and greed. Knowing when to step back and assess the situation objectively is key.

    
    

Does this mean buy every damn thing every chance you get? No, but I do think your time frame becomes incredibly important when you are looking at this. Are you looking for a short term rally? Buy when the VIX hits 65 and closes below 30. Are you looking to buy as a long term value holder like Buffett or Lynch?

"The key to trading success is emotional discipline. If intelligence were the key, there would be a lot more people making money trading… I know this will sound like a cliché, but the single most important reason that people lose money in the financial markets is that they don’t cut their losses short" Paul Tudor Jones

The most important thing that any Market Wizard ever said…

"Every trader has strengths and weaknesses. Some are good holders of winners, but may hold their losers a little too long. Others may cut their winners a little short, but are quick to take their losses. As long as you stick to your own style, you get the good and bad in your own approach" Michael Marcus

Know yourself! Also next week for paid subscribers we will also start running a short term system using sentiment and positioning to show you when sectors are overheating.

Equities

Down Friday and a down Monday.

A down Friday followed by a down Monday usually leads to inflection points or trend changes.

Two things I look for are what does the market do on an OPEX week and what does the market do around down Friday’s followed by a down Monday.

One of my key indicators signals market trends. When we get a close below the blue line, followed by a close above it, it typically precedes a market rally. However, if the market closes below the red line, it could indicate something more significant than just a dip.

This week, the weekly new highs/new lows is positive for the New York Stock Exchange.

The NYAD Bull/Bear indicator is back in to positive territory. It never got to a sell or neutral signal but we did hit a weak buy signal. Now it is fully back in to a buy signal.

Equities can perform post cuts. However, we need to ask the question. Will we see growth going forward.

Most intermarket models currently indicate a slowing of growth moving forward. However, this trend is not set in stone, as numerous factors influence yields and intermarket analysis, including inflation, economic growth, and policy decisions. Stay tuned.

The US dollar falling is a way of creating global liquidity as well. The dollar is finally breaking down. It has made it’s first 100 day low of the year as well.

As I mentioned, I can’t wait to see this weeks COT report and now the ROC has hit 0 on the index indicator. Every time it hit 0 on a USDJPY rally, the trade has reversed.


Commodities

The Fed is poised to begin reducing interest rates, and we're entering a seasonally bullish period for many commodities, while the dollar is weakening. We've taken long positions in some commodities intermittently, but given these developments, our strategy may shift. Let's examine which commodities are currently at support zones. You have heard me talk about sentiment, positioning and fundamentals for weeks. Now let’s look at price.

Corn, wheat and soybeans.

Sugar-Major moves are coming. Stay tuned

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