Trading Success Ep 8

Chris: Good morning, Cam. Welcome back to Trading Success with Cam Buchanan, how are you?

Cam: Good Morning, everyone. Hey, Chris. I’m good. Thanks. Well, very interesting week last week, the markets looked like they were going to fall off the cliff early in the week, then we had this incredible recovery. So it was two sides of the equation last week. So it was fascinating to see the market movement and how much the markets can move. I think we are just looking at the -I’ll bring up the charts straightaway, so I’ll share my screen…

Chris: Looked like there was a similar story across most markets with with that sort of recovery.

Cam: Yes. There wasn’t a huge amount of news that came out, the news at the end of the week was probably the news that changed the market more than anything.

So we analyzed last week, at the start of the week, we we looked at what is that? That’s the so yes, that was Monday, Monday’s trade. This is basically the regular trading hours in the US on the NASDAQ. It’s just what happened in the regular trading hours.

Last week, what we were looking at was seeing if the market could hold on the NASDAQ could hold above this, this 50% level here on the weekly 50. There was Thursday’s high and another last week’s high as well, there. When the market opened, the market sold off. I think on Tuesday, we had quite a strong sell off. Then Wednesday was very windy day. The market went up and then came down and closed down on its lows.

Then on Thursday, the market showed a little bit of recovery. But we had this inside candle. Now on Friday that unemployment news came out. So the unemployment news wasn’t as good as expected. There was, I think, 175,000 jobs have been created in the previous month with are expecting over 220,000 jobs created. So that wasn’t a great number, then the unemployment had increased slightly as well.

One of the key things that Jerome Powell spoke about last week, (who’s the Federal Reserve chairman), who controls the interest rates, he said, they’ll be looking at the employment numbers to see their direction on what they’re doing with interest rates, because everything at the moment seems to be hanging around, particularly in these equity markets, the the s&p 500 and the NASDAQ.

People look at interest rates, like that’s one of the key drivers of price. So basically, with that poor unemployment situation, that could trigger the Fed Reserve to cut rates a bit earlier. So there was talk that maybe September they will be cutting the rates. So what happened to the market, the market rally, it absolutely went ballistic.

So we’ve got this, you can see here on the regular trading hours, we’ve got this massive gap down here. So the market has created a large gap. What we’re looking to see this week -and another interesting thing as well is that we’ve got two weeks where the market has been fairly sideways through here, like a 14 day trading range or a 14 day balance. One of the things that happen when you’ve got those sorts of scenarios, when you’ve got this type of trading range here. You either want to see the market, hold above the trading range and keep going for it, so more for a bullish trade, or you look for the market to fail.

So maybe today, being Tuesday, we want to see how the market opens and reacts if the market gets below this level, particularly primarily in the US because the US is really what drives the market. So if the market gets below Friday’s high over here, then look for a trade all the way back down to the other side this week. Particularly because we’ve got this gap here.

If there’s a fake out to the upside, look for the market come back inside of Friday’s high, which is around about 1850. Watch 1850, if we get below 1850, then we will probably be trading back into the range. Right? Its two week trading range. Now if the market can hold above this level, which looks like it wants to, from Monday, it looks very positive.

Watch to see if the market can come back to this 1850, and see if we get a retest of that level, then that level becomes support. That’s the kind of things that I’m going to be looking at on the NASDAQ this week, see a continuation to the upside, maybe a retest of these highs over the next couple of weeks, or we’re going to come back into this trading range and we’ll look to go lower.

Alright, so I don’t know whether the markets bullish enough to break out to the high side yet, I still think we’re in this larger range. You can see here on a weekly scale we are in this range here. So maybe if the market does break a little bit higher comes up to 76. This could just be the retracement leg. So we could have an A leg, then B leg and maybe we get C back down maybe a retest of 7000.

Interesting to note also this down here, I’ve got the Cot data, which is the Community Trade data; this is an indicator you can pull out the NinjaTrader platform. I’ve got that just running on the weekly chart because the Cot data comes out every Thursday. But it’s a lagging indicator, because it’s a week behind. It tells you the net position of the traders. Okay, so you’ve got three categories of traders, you’ve got the commercials, which are the red ones, you’ve got the non commercials, which are like your large speculators, and then you’ve got your non report, which is green. Now, typically, what they say is that the non commercials and the non reportable who are generally on the wrong side of the trade. They’re net long at the moment, whereas the commercials, which are typically they have the inside information they’re typically on the right side of the trade, the big news net short at the moment, all right now, this is not the it’s not a great indicator just on its own.

A lot of larger traders use it like us listen to the unknown Market Wizards the other day, there’s a guy called Jason Shapiro, who’s a contrarian trader, the great books to I highly recommend those market wizard books, you keep coming back to the same themes when you read those books. And it’s all about risk management. Trading is purely about risk management. And obviously, mindset is a big part of that, and sticking to your strategy and having, you know, tight risk or just having a consistent risk amount. But one of the key things is that for this Jason Shapiro is he looks at this commitment of, of trade the key CRT reports, and he will very much follow the side of the commercials. So if the commercials are short, then he’s primarily looking for a short position. So he goes against the herd, typically. And we saw that a couple of times last week, just on the five minute charts, just in our just in our micro day trading. You know, how going against the herd paid off very, very well. And, and, yeah, so I think it’s an excellent strategy to look at because, as they say, the majority of people in the markets lose money. And it’s quite interesting some of his trades will be he’ll just listen to what the CNBC reporters say. And he knows that some of these You guys do the reporting consistently on the wrong side of the market. So he always trades against them

Chris: I hear a lot about people just trading whatever Jim Cramer says go the other way.

Cam: Exactly. That just comes from like history of watching people and just basically fighting the masses.

Which makes sense, because it gives you a very good risk to reward trade. Yeah. And we’ve seen that with Bitcoin, recently, as well, like, you know, there was so much like, if I bring over the Bitcoin chart, you can see there was so much hype with Bitcoin through this period here, right, this is the daily chart. And this one, everyone’s talking about the halving and the harping and harping, the halving and price is gonna go to people were saying 300,000 150,000, a million, you know, some of the speculating numbers out there, like all that sort of stuff, you know, to the normal person is like, Oh, wow, these experts out there talking, we got to buy this, right. But what it can do, it basically fuels all these people coming into the market.

Now, the philosophy is, when all these people are coming into the market, at these high prices, there’s nothing left to fuel prices going higher. Yeah, there’s no money left, right. That’s kind of how a recession works as well, that’s like, when people get so hyped up enough that all their money is in the market, everyone’s safe to be in the market. And prices can’t go any higher. Because there’s no one pushing price anywhere that, you know, will will cause the big recession, right. But you’ll see it when the big when the property markets just booming and everyone’s in in this, like you’ll hear on TV, you know, people will say this, if you don’t get in there, you’ll miss out and missed the boat.

All this sort of fear and greed sort of stuff comes in. When you start hearing mainstream media, it really pumping the tires of markets, that’s when you’ve got to probably try the opposite way. So, you know, Bitcoin you can see here, we’re in this in this correction at the moment, we’re in this kind of, you know, descending tight range, if you run a trend channel over the way, where we’re sort of seeing right now.

If we run a Trend Channel, that’s probably been the there was a bit of a fake out to the high side, that’s probably more like where we are. So we’re kind of 50 cent 50 cent above the channel. So that the red lines being the 50%. So where we kind of holding above, but you know, I wouldn’t really be jumping into bitcoin just yet. Until, you know, give it a bit more time, I think, basically in this range, but when we start seeing it swing back up now is starting it is swung back up now. But if we get a couple of swings, like maybe the second swing back up, that would be a bit more confirmation, the markets trying to go up. You can see here the first swing that tried to break out here, you know, failed. So it needs just a little bit more time for the market to to find itself. But yeah, there’s I think there’s still this year, particularly when we start seeing the bull bull market running in the equities this macro run as well. Now gold, gold once again, was was one of those examples of No, buy the rumor sell the fact right, so when we started to see the war really heat up, we started to see on this particular day here.

The market shot up right? that was the Friday where we had some serious attacks. That was Israel retaliated. And look, the market didn’t go anywhere. Right. It was just like there was just no aggression. You know, this is a major news announcement. And typically you think gold would just go through the roof, right, but everyone was all in at that time. So the market couldn’t go any higher. And what’s the what’s the market since then? It’s turned away. Yeah. So when you expect something to happen, and you don’t see the reaction from the market it’s a good idea to trade the other way. See, oh down here, this is where all the hype was. This is where all the that You know, the the anticipation, you know, now the price is now you know, the war is valued into the market here right now. So price is already valued in and there’s no one can see any, any value anymore.

Chris: As you said with the news, I remember seeing the news on a daily basis a few weeks ago, gold, gold, gold, all time highs, all time highs, all time highs. Now it’s back to the property sector property going up 6% You know, no gold’s not been talked about anymore on Channel Nine.

Cam: Interesting, isn’t it? Like you follow the news? And go the trade the other way? Because it’s a psychology thing, right? It’s, it’s not about the price. It’s about the, the competition or the, the, the consumers know, what, what’s the acceptance of price. You know, when everyone’s all in the market, there’s nowhere for price to go, because there’s no more money left. No one’s prepared to spend any more. So if everyone’s in on the market, smart money is going to be shorting that market. In this situation, or if the markets been trending up for a long time. And remember, price is typically built into the market, you know, six months out as well. So, you know, these these targets up here, we’re, we’re basically targets that were, you know, six months ago, that was what people thought, yeah, this mark is going to get to that when he gets that my trades done, you know, I’m going to be getting out of the market at that point. Whereas the, the kind of dumb money is kind of coming in at that point.

Chris: Yeah. Now, because I’ve been watching the news and listening about it and thinking, Oh, I better buy some gold.

Cam: That’s what the masses do. Right? The masses follow the mainstream media, they love it. It’s just the way we are. You know, it’s safety, safety and numbers. You know, the, the, the early adopters are the ones that get rewarded, right, they may have to pay for it in terms of time. But they, the patients, you get paid for patients, whereas has it been trading in patients typically doesn’t, doesn’t pay, and doesn’t matter what timeframe, you’re trading, you know, patience and discipline to your plan. And your risk is just so important. But, but also, I think, understanding how prices work and how markets work. And that’s can be very confusing for a lot of people because new people come into the market. There’s a negative news article, you know, you know, prices should go down, but prices are going up, you know, like, NASDAQ and the s&p. You know, what are the s&p do last week?

Well, s&p had fairly negative news, you’d think employment numbers were down. Unemployment was increasing. What did the market do? It’s gone up the last two days, will last three days. It’s been through really strong bullish by candles. So So yeah, so that’s the s&p as well, right there. So, you know, we got above those two levels, or those three levels that we spoke about. We’re above the 61 Eight. So the 70 652 50 Once again, very similar to NASDAQ, you know, we’re in basically a 14 day trading range, or two week trading range to whole week. So we wanted to see the market hold above, you know, that price there 5165, if it can hold above 5165 over the week, then we will probably going to be seeing higher prices in the short term. But if the market fakes out and comes back into 165 or 166, around that price there, I’d look for a trade back down to the other side over a long period of time, but you know, as we’re short term traders, obviously you’ve got to really hone in on your positions and and look at your look at your liquidity zones and your fib levels and basically really find those double tops and triple tops and just pay pay a bit of attention to the news as well as to see what what could be driving the price but yeah, that’s the kind of way I’m playing the equities this week is probably going to see a continuation if it fails and look for a short and look for it to get back under those Friday highs in NASDAQ or s&p for shorts.

Last one I want to look at is oil. Oil has been the has been, once again, a bit of a bit of a victim of news, everyone was hyping oil up around here. And particularly with all the wars going on, it’s going to be you know, trade embargoes and all these sorts of things. The only thing now with oil is that America is as a net exporter of oil these days. So, you know, what’s happening in the Middle East isn’t going to affect oil price as much as what’s happened, you know, say in the past. So, if there’s, if there’s strife in the Middle East, you know, America can still, you know, if this if they stop, you know, if they want to put an embargo on America for oil, then, you know, that won’t affect that won’t affect things so much, but so that’s, I think we’re just seeing a typical rebalance after such a strong rally in oil.

I think we’ll still going to be bullish later in the year that it might be sort of back into this range at the moment. So the 50% level is going to be key around 76. See this, some buying coming in around that? Sorry, $77 Price, Mark. But, yeah, I’m looking forward to later in the I think we’re gonna see some real strong movement in in the stock market, that at the moment, things are things like they’re just holding off and just in a bit of a range at the moment.

Chris: Just times for now, as you say that, be careful. Be patient while it’s, you know, and keep that risk management in check. So that when the boom does come, you’re ready to go.

Cam: Yeah, that’s right. You know, and that’s it is, you know, wait for that money to come back into the markets. Looks like there’s a bit of a money, bit of money is coming out of the markets the last couple of weeks. So for the last three, maybe three weeks, four weeks, put some money on the sidelines. So wait for the big boys to come back into the market and drag things around that. Can’t really see that happening at the moment.

So just one thing too, there’s not a lot of Red Flag News as well, on forex factory this week. And I haven’t looked at the earnings reports as well this week. But next week, we’ll have a little bit more at the earnings as well.

Chris: Excellent. Thank you again, Cam.

Cam: Thanks a lot, Chris. I’ll see you next week.

To listen to more of “Successful Trading with Cam Buchanan” you can find the series on Spotify, and you can also find all of the episodes of Successful Trading with Cam Buchanan on YouTube.