Hello traders,
What a week it has been!
I struggle to think of a busier time with US earnings season colliding with the madness around WallStreetBets and the short squeeze in GameStop, AMC and Nokia. It was only last week that markets had broken to new highs on the back of President Biden’s inauguration, which provided some reassurance amidst the still uncertainty of COVID and the roll out of the vaccination programme. January has flown by, and it feels as though we are well in to the new year (despite being only 3 weeks in to what looks set to be a 2-3 month national lockdown here in the UK).
With month-end fast approaching, we released our newly updated Monthly Checklist Report earlier this week. Whilst there are lots of new setups in there that I would love to share with you all here, we must prioritise first access for our paying Trading Club members. If you would like to join them for immediate access to the report, simply head to our Trading Club page to register. You can also find this week’s full video analysis there too, where I go through each of the Checklists and explain my favourite ideas for the month ahead (and there are plenty!).
In the past couple of months the focus of our process has been on gold. Without wishing to sound like a broken record, there is yet another interesting setup forming this month. Without being able to reveal the score here just yet, Trading Club members have been keeping an eye on the intraday chart for a potential setup.
Here’s the Checklist, with a couple of the scores hidden for the reasons I have already mentioned. What you can still see is the negative assessment for the real interest rate, futures positioning and short interest, offset by positive scores for liquidity and seasonality. With gold in something of a range at present, momentum in considered neutral.
I will however share our Market Risk Checklist with you in full (as its Friday, and also so that you don’t think that gold is all we ever talk about!). This is really useful in helping us to identify where the balance of risk lies in the month ahead, and can provide confirmation (or rejection) of the score seen in other markets, including gold as a traditional safe haven. As you can see, the score for February is positive, suggesting that investors will generally be less defensive and more risk seeking. If you knew that gold was a negative score, this would add conviction (however, I’m neither confirming nor denying that it is!).
In terms of actioning the score for Market Risk directly, Lex and I like to watch the sector ratio of Industrials to Consumer Staples. One would generally expect to see industrial stocks outperforming (rising ratio line) when we see a positive score, and underperform (falling ratio line) when investors go more defensive. As you can see, there has been a correction in the past few days (just before the latest score was published) which may provide an opportunity to get long.
This is of course just one way to potentially play the positive score we see in our Market Risk Checklist currently, and it can be equally valuable in helping to inform your world view across multiple asset classes. To learn more about our methods, and join me for more analysis in real-time, check out our MDT course and Trading Club pages where you can preview everything that we cover. In the meantime, why not head over to our YouTube Channel for our latest FREE videos which I will be bringing to you each week in 2021!
This week I looked at the WallStreetBets short squeeze in GameStop, and how I’ve been trading US earnings in Apple, Facebook and Microsoft this week. As there’s no charge for this content, it would be great if you could support the channel by leaving a comment and subscribing!
You can watch this week’s video here: https://www.youtube.com/watch?v=T9TaMq_jZNE
Have a great weekend,
James
Disclaimer: For educational purposes only. Even though we do our best to provide reliable data, you should not trade based on this information. For more information go to www.milliondollartraders.com
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