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Bull Volatile Regime

Feb 15, 2021

We knew this was coming, the volatility. 

If you are new to this game or been around for a while it should come as no surprise that markets can go from relatively calm and peaceful to extreme volatility quickly. 

The last part of 2019 and first month or so of 2020 was the Bull Quiet regime, which is low volatility, nice easy drift to higher price levels. It’s very easy to trade, you simply buy for any reason and hold because prices, even if they drop, will resolve higher in short order. This is when you as a trader, as long as you don’t get too cute with the sell button, can make the most and easiest money in the markets.  

As the saying goes, it’s easy to make money in a bull market, and the Bull Quiet market regime is exactly what they are talking about.  

What makes it even easier to make money in a Bull Quiet market regime is that we DON’T have a real market top happen in a Bull Quiet regime. This is important because knowing...

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Categorizing Market Regimes with ATR

Feb 15, 2021

The trading team in the "Lab" have been doing a lot of work on different ways to categorize market regimes, and the many different characteristics of each regime. 

Of course if you've been seeing my emails and following our work at Pollinate you know that we put a lot of importance in the value of categorizing market regimes and using the SQN indicator to help us do that. 

Another even easier method to categorize the regime is to use the ATR indicator. 

ATR = Average True Range basically smooths out a moving average of the length, which out of the box is 14 bars. 

So the way we use it is if the ATR is declining then the volatility is declining.

If the ATR is rising, then the volatility is increasing. 

Pretty simple!

Let me show you what I mean on the Nasdaq Futures daily chart


This is one we've been talking about for a couple of months. 

You'll notice that the SQN indicator signals a sideway/neutral regime all while the price has been rising...

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Metals on the move and in bull quiet

Feb 15, 2021

I've been getting hit up by a bunch of people about this breakout in metals. 

To be clear, we are in a bull quiet market in metals

Gold has been doing quite well since it cooled off from it's move into Bull Volatile last fall (US time), shown by the blue histogram. Recall that this is a requirement for a major top, it doesn't mean it is a major top, but you don't have a major top without one. 

 

And when I get asked if I think this is the top and how could I even consider getting long at such high levels, I usually respond with "I can see the future" or something like that. But really it's just that there is no Bull Volatile regime in place yet, so sitting long is easy.

Then we get the next question...

"OMG Silver is up 20% in about a week, this is a blow off top!"


To me, it seems we just flipped into Bull Quiet on a breakout. So though we might not go a lot higher from here we just entered Bull Quiet and we'd need a Bull Volatile regime to show up before we topped,...

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Stumbling over "breadth"

Feb 15, 2021

There is a lot of chatter on the Twitters about the weak breadth, low volume markets these days. Smugly bearish doomsdayer's looking for any sign of bearishness to call, yet another market top. The latest tool that they are pointing to is the very low volume in the markets...in August.

I get emails, DM's and texts day after day complaining about the Federal Reserve, Jay Powell, the elections, CoVid19, and all these other narratives about how the world should've ended long ago, or will likely on any given tomorrow.

All of this is true, but the market keeps going higher. 

This is a clue, no, this is way more than a clue that the market isn't the headlines, the market isn't the economy, the market isn't the news. 

The market is the market.

Our job here at Pollinate is to trade the markets correctly, that entails being on the statistically advantageous side of the trade. There a number of fairly easy ways to do it, but they get overlooked with a shiny headline, or some...

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This is where things get interesting

Feb 15, 2021

First of all I want to remind you as we come to the end of the month, we will be raising prices for the Trading Lab at the end of the month. Get signed up now and lock in our launch price for ever. Trading is isolating, it's hard to find a good group of like minded traders who are actually trading the markets successfully and not gambling on headlines or fear, that is what we have in the Lab. 

Ok on to the markets...

Earlier this week I mentioned that I expected to see the $NQ close the month flat around the 11,600 to 11,700 level. That still is a possibility, but today we find ourselves on the doorstep of 12,000.


Why is this level so significant? 

  1. It is rare that we find ourselves so many stand deviations above the mean.
  2. Not rare, is that we have completed a measured move higher from the February highs to the March lows
  3. Historically closing the month >3 standard deviations higher from the open of the month indicates a larger down move the...
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Seasonal weakness, September is historically the...

Feb 15, 2021

A quick reminder about the Trading Lab before we get started. If you find trading to be an isolating place, then you aren't alone. I've been trading for over 20 years and I know for sure that the times when I haven't had a team to work with, to bounce ideas off of, to mentor and be mentored, have been my worst periods of trading.

This is why I created the Trading Lab. Having a team of fellow traders at hedge funds, family offices, prop traders and professional traders to ask questions, get real insight on what they are seeing on their trading desk. I can ask an equity trader at a hedge fund what he's seeing in sector flows. I can check in with the prop traders on what they are seeing in FX. And of course EVERYONE has a question about something in Crypto. 

We will be increasing prices at the end of the month, so if you are on the fence you should join now and lock in the current price for as long as you maintain the subscription. Join us in the Trading...

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Likely outcome to 3 std dev + bull volatile

Feb 15, 2021

As I've been saying, the group of knowledge and skill we have put together in the Trading Lab is amazing! A number our members have already partnered up and collaborated on building their own trading strategies for their own unique needs. Not to mention our live portfolio us up over 40%, and that includes the hedges we put on earlier this month in $QQQ and $GLD to protect our downside. 

Today is the last day that you'll be able to join the Trading Lab at these prices, we will be doubling them tomorrow. You can lock in your price forever if you sign up today.

On to the markets...

You'll notice that I've been a lot more prolific with my emails this past week. That's because things are getting very interesting. 

For the past 5 or so months I have been the most bullish guy on Wall Street. Buying dip after dip, buying rip after rip. I was telling everyone I know to buy for any reason that they could think of, buy because the market dropped, buy because it...

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Bull Quiet market regime is back but for how long?

Feb 15, 2021

In last weeks email I talked about the confusion on the $NQ after that 13% selloff that we were already well prepared for coming in to September. 

The confusion we saw is characteristic if a market battling it out and finding resolution to who is back in control of the price action. In the Trading Lab, we got long NQ on Sept 21st with a first initial trade. In last weeks email we talked about what I expected to see if the bulls were back in control.

We got what we were looking for this week, and we have added 2x to our long position this week.

Our first entry last week was off that big spike low with a buy stop above it on the 21st. Our second entry was Mondays move above last weeks high, pulling us in a second time and finally on Wednesday we added to the long position. 

The thing about equity indexes, especially that are so overweight market leaders, is that they have high incentives built within their structure. Or said another way, they are structurally...

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Market overview October 12 2020

Feb 15, 2021

We made it!

After sending out the Bat Signal warning of a market pullback the end of August in this post a timely email and a bunch of tweets, hopefully you were able to lighten up our long exposure, hedge or even get short and ride that 13% pullback.

As I mentioned in that email/blog we had an 80% chance of a 10% or worse, selloff in the coming weeks. We did, and that’s that.

So far so good, but what we really want to know is, what’s happening from here.

We are firmly back in the grips of the Bull Quiet Market Regime! This is the best, and easiest, regime to make money being long only. If you need to read up on Bull Quiet, here’s a post I did on it. 

In the Trading Lab, we have got long from the lows, with two buys and a third buy the following week after the market broke decidedly bullish.

Now it’s our job to look for reasons to buy, and stay long.

There are many reasons that you might think of why the market shouldn’t go...

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Bull quiet market regimes and EURUSD Trade

Feb 15, 2021

I got a buuunch of great feedback from the video yesterday so I will keep cranking them out. Todays we cover the Bull Quiet regime, as it currently sits with $NQ

Watch Bull Quiet Video

On another note, the traders in the Trading Lab nailed that FVBO long on $EURUSD overnight

There aren't a lot of good trades to be had since we called the Aug/September highs and got short, took profits on longs, or hedged. 

Once the election is over, and things are starting to become more clear on Monetary and Fiscal policy for the next 4 years or so, the markets will become useful again. For now, too little reward, for too much risk. 

In the lab today, we broke down the last 16 years of elections setups and outcomes 

2004 Neutral Regime - face rip rally the next few weeks
2008 Bear Quiet - 25% selloff in Global Financial Crisis
2012 Bull quiet - Face ripping rally for 3 more years
2016 Neutral Regime - face ripping rally to today

2020 - TBD!

If you are spending your time...

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