Range Bound Market - Boringly Profitable

Hi everyone,

I hope you’ve had a good week. In my last post I showed you how our Checklist Report had helped us to identify a loss of momentum in US equities, which signalled a probable range bound market in September. So far this has played out just as we expected, and highlighted to our Trading Club members in our weekly video analysis. Whilst many retail traders may overlook such opportunities in favour of chasing momentum, the pro’s know how to capitalise on a ‘boringly predictable’ range and make it ‘boringly profitable’ for them.

Here’s our Checklist showing the neutral score which replaced the successive positive readings that had been present for the past few months.

A score of zero suggests that we should look to trade the range using short term oscillators such as the RSI alongside other support and resistance indicators. Here’s a reminder of how the chart looked last week, showing the four setups that we had through last Friday.

Since then, the market has produced two further setups as can be seen in the updated chart below (please forgive my crude annotations). Although we didn’t quite get to ‘oversold’ on the hourly RSI on the 11th, the S&P futures did successfully retest the low and bounce from there. An ‘overbought’ condition was reached on the 15th, before heading ‘oversold’ again on the 17th. From there, traders may have covered their shorts and flipped long, and would be ‘in the money’ on their position at the time of writing.

You may also recall my comments on Tesla, which I used to demonstrate how the recent sell-off in growth names was likely a correction, rather than anything more concerning. Here’s how the chart looked last week, with TSLA at 371 following profit taking in to the 261.8% Fibonacci extension around 500.

A week later, the EV manufacturer is likely to be 15% higher at the open today. Not bad considering the market has gained a mere 50bps over the same period!

And we have of course been discussing new ideas across other markets in our Trading Club video analysis this week, with the most notable action seen in gold and the Japanese yen. We also revisited some single stock ideas, including Facebook, Amazon, Microsoft and Charter, before sharing our favourite pick. Whether you like to trade stocks, currencies or commodities, our Trading Club service provides these Checklists in real-time along with our weekly commentary covering all the key markets.

If you would like to join us for our full analysis including new insights each week, or learn from the ground up with online tuition from Lex in our MDT online course, then head to milliondollartraders.com and take your financial knowledge to the next level right away!

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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