Market Regimes: Crypto, Natural Gas, Nasdaq and Bonds

Aug 18, 2020

It was a busy week (and weekend) with the cryptocurrency markets taking a lot of our focus. In fact this week our busiest channel in the Lab is the Crypto channel, by far.

I won't make this email all about crypto but I want showcase some of the trades we took this past week. 

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(I go a lot deeper on market regimes down below, stay with me!)




To be fair, it was pretty easy to make good money in the crypto space last week. But there were a number of members in the lab who didn't know how to access the markets, didn't understand security, didn't know what assets to trade and generally would've been lost without a network of fellow traders to lean on. 

You'll notice that you don't see any SQN indicator or ATR indicators on these charts, you might say "But Chris, you are the regime guy, how do you trade without the regimes?"

It's very comforting to rely on indicators to do your dirty work, and they do a great job on the whole. But if there's one thing that trading in 2020 has taught us, it's that regime indicators lag, and we need to be ahead of the game or we miss the big moves. 

Take the Nasdaq Futures trade that I've been talking about since April, if I waited for the indicator to tell me we were in a bull quiet regime, well I'd have missed 80% of the move. 

By using a Market Regime filter, like the SQN or ATR in my backtesting I can help identify unique characteristics of the best regimes. Once I identify those characteristics, then I don't need to have the indicator tell me the regime, I can simply use the best strategy for the identified regime.

Market regimes come in many shapes and sizes. 

Macro Economic conditions for example, inflationary, deflationary, stagflation, growth, recession, depression etc...

Bull market, bear market, sideways market.

High Volatility, Low Volatility

There are plenty of ways to categorize a market regime, and once you understand what assets perform best in the regime you've identified, and more importantly HOW they perform then you can adjust accordingly. 

With all that in mind let's have a look at the more traditional markets


Nasdaq Futures

I've highlighted each time $NQ has gotten in to a sideways channel and how it's resolved itself after. Each time we've consolidated it has happened with big bearish candles sucking the bears in only to stop them out, again, as we put in new all time highs, again. 

So why wouldn't it keep doing the same thing over and over, why wouldn't we just buy this dip mindlessly and carry on?

This is where Regime steps in to inform how we play this. 

As we saw for the past few months, even though SQN hadn't printed a Bull Quiet regime, we were clearly in one. And we knew that because we knew the obvious characteristics of Bull Quiet, one of which is 

The very best sell setups in the world, fail, again and again 

And that happened over and over. The only difference right now is that we are quantitatively in a Bull Volatile regime. That doesn't mean the party is over, it simply means that we now have, potentially, a new set of characteristics of how a market will trade. 

Being a lot less aggressive in Bull Volatile and will give this one some time to play out. 

And now I pull it back to Bitcoin


Unlike $NQ that has been on a beast run and is pushing hard into Bull Volatile, Bitcoin has been consolidating nicely below $12k, and just broke above it today, in a Bull Quiet Regime. 

This means that conditions are right for a sustained move higher. I put out a video this weekend on my thoughts with BTC but if you've been following me for any period of time it shouldn't be any surprise to you why this bullish setup has such potential. 

30 Year Bond $ZB 

The long bond has a particularly nice setup, a lot going for it. Let's start with a FVBO long in a Neutral Regime, this is the highest win rate setup in all of our strategies. What makes this more interesting is that it has been consolidating in a bull quiet regime since March

This is the sort of setup that could be an excellent opportunity to get long at the bottom of the range and move back into a bull quiet regime and have some legs. A great example of a systematic approach with some discretionary sprinkled on top. 

Natural Gas $NG

Natty Gas has moved quickly into a Bull Quiet market regime, and is grabbing everyones attention. There is a potential for a sustained bull move here, I say potential because...

There are many instances that a power move has shown up, flipped to bull quiet, only to get stomped down with a vicious beating. 

The last time it happened was in this general neighborhood

So while it is tempting, I'll be waiting for a better setup


The past few months have been easy money making for us, but outside of crypto, nothing is looking as simple as it was a few weeks ago. Which means it's time to tighten risk up a bit, only take solid setups like the $ZB long setup and keep that discipline. 

We are definitely going to increase the price of the Trading Lab at the end of the month. 

Sign up now before prices dramatically increase, and you can lock in the current price forever. Also, i've added 6 months and 12 month subscriptions with discounts, if you are on the fence, now is the time to join us in the Trading Lab 

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