All Eyes on the Fed: How to Survive a Bearish Choppy Market
Dear Traders,
Yesterday, we hosted two amazing webinars, one by Dr. Kenneth Reid on the to do’s and not to do’s when trading in a bear market, and one by Brian on his notorious TradeBooks such as the Rising Devil. The link to Dr. Reid’s chat is here, and Brian’s webinar will be uploaded in the Education Center later today. Do note that all new Elite annual members of our community will receive a free 1:1 coaching session with Dr. Reid.
Today, as I write this newsletter, the market has gapped up and traded in a very narrow range. I managed to get two scalps from NVDA and TQQQ, Brian nicely traded ACAD in the premarket, and Jarad had some amazing reversals on EDU. You can watch our recap here.
Today is interest rate hike day! Wall Street has already fully priced in a 0.75% increase from the Federal Reserve, and is now keen to know whether Chair Jerome Powell and his colleagues will raise the benchmark by a similar amount next month. Treasuries seemed calm after a tumultuous few days, but that may be just the lull before another storm. Bitcoin prices dropped once again, driving the token to the brink of $20,000 on evidence of deepening stress within the crypto industry. The largest cryptocurrency sank 8% to $20,180, the lowest level since December 2020. Bitcoin has fallen for nine days, the longest losing streak since 2014. Losses continue to be widespread, with Ether plunging 10% to $1,062.
At Bear Bull Traders…
Tonight, for Wednesday Psychology, all Elite members are invited to join Mike at 8pm ET for a webinar entitled: Trading Psychology 101: Defining Your Trading “Why”. Understanding your trading “why” is the first step to mastering your trading psychology. As a trader, you are far more likely to make the changes needed for success if you truly understand the reason you trade. In this webinar, Mike will discuss how your ability to accept changes hinges less on how much you like the reason you are trading, and instead more on how much sense the reason actually makes to you.
And Finally…
Inflation and the tightening financial markets have caused corporate America’s profit margins to revert back to the mean. From 1994 to 2020, the corporate profit margin was slowly and gradually increasing from 5% to around 9%, an overall 3% increase during this almost 25-year time frame. After the 2020 pandemic, the corporate profit margin has suddenly jumped from 9% to over 125% in only two years. With the Fed and the White House now on the brink of going after inflation, corporate America has to revert back to the mean in terms of profitability, and that is why the stock market is weak.
Ardi recently published a model in his newsletter demonstrating that with a 3% interest rate, and a reduced P/E, a SPY of $300-$330 can be reasonably expected this year. You can read Ardi’s newsletter here or, if interested, you can join his list here.
To your success,
Andrew
PS1: If you have not already, I urge you to try out our free web-based trading simulator
at stocktradingsimulator.com. It’s conveniently available 24/7, whenever you have time
to practice honing your trading skills.
PS2: Don’t forget, if you are not yet an Elite annual member, you can take advantage of our current promotion and receive 50% off the cost of an Elite annual membership. In doing so, you will also receive a complimentary 1:1 coaching session with Dr. Reid. More information can be found here.
PS3: Although it is still in a beta version, you can visit tradingterminal.com to do research on stocks you’re interested in. While we have not perfected it completely yet, it is a great place to not only research stocks, but also crypto and forex, as well as catch up on the latest news. There’s even an earnings calendar to assist you in making trading decisions.
