Way of a Trader Blog

OK - we have a new strain of COV19 detected in the UK.

What do we know about the mutation?

( important excerpt )

Have been holding my short positions for much of past 3 weeks, exiting at major support nodes, and re-entering on the short side on rallies into resistance.

I've managed to ride most of the move down. It was an incredible few weeks of trading.

Could I do some things better?

Most Definitely.

There was a clear trade trigger that would have given us a nice fill still near the highs ( will break this down during DiNapoli Masterclass ). I had been warning about the Muliti year resistance nodes for months, since Dec 2019... I made money off those levels twice... but I missed the big break, that 4000 point down week ( 3 weeks ago ).

Our techniques did allow us the criteria to go short the market during the break, but your ability to execute the trade and get your fill is a function of your discipline, and level of preparedness as a Trader - Which takes significant work - on your part - to stay sharp, much like an athlete.

It didnt help that we have super computers and algo systems...

I had been sharing with my Weekly Focus members this chart maybe 1 or 2 weeks ago. ( VERY IMPORTANT CHART )

People can't believe that we are actually talking about yearly support nodes at

2482.75 and 2354, just 1 week after DJIA fell 4000 points within a week.

Well, it is hard to believe that we are already trading there, soon.

I will be doing a webinar soon where I will be discussing the COV19 Situation, and where we will likely be trading from here.

See video for the details.

Best of Trading

Good Luck!

Joseph AuXano

PS. Stay safe

We just hit 109K confirmed cases of COV19 worldwide.

Italy Just surpassed S.Korea to take up #2 spot for the most number of cases, outside China.

If you look at France, Germany each with 1000 cases, followed closely by Spain and the USA.

This is no longer an Asian Epidemic. It is an European Epidemic.

The markets are already reacting to this during Asian Trading Hours now, with S&P futures trading down more than 7% at this time.

Here is why all this is a big deal.

We are in a Pandemic. Here is why.

If you look at the cases in within China, we looked to have reached a plateau.. new cases have gone down significantly. What ever quarantine measures the Chinese have done - they seem to be successful. This is good news. It is also bad news for the economy and I will talk about that in a bit.

Now look at the number of cases outside China. Since Feb 4th we have started to see significant day to day increases.

We saw what happened in S.korea. How it was just under 300 a couple of...

( Below is taken from today's Weekly Focus Post , where we send out weekly and daily updates like this to members )

I am adding this here because of its potential significance - and possible implications,

Traders, all ducks are in a row for a significant move to the downside - I think.

ES Daily

Crucially, we are once again trading back below 200MA and daily f3 resistance.

240min

we covered the gap near the open.

ES 60min

Testing 60min MACDP to the downside

ES 30min

Crucially - 30min MACDP is down - in my favor.

I am short based on context from 60min up to Monthly, all pointing down.

Looking for a break of 30min TP and 60min TP to confirm my downside bias.

ES 5min

Even 5 min MACDP is pointing down.

All ducks in a row, at this moment, from the 5 minute all the way up to the monthly chart, pointing towards a flush to the downside. ( only 240min trend is against me - I'll take that! )

Thats my expectation at this moment and I am looking at dynamic pressure on the 5 minute chart...

So for those of you that have been following this blog, and following the markets,

you know of the market volatility we have seen in recent weeks.

One way to look at it was the corona virus.

But just 2 weeks ago - the markets was making new market highs!

Since December, I have highlighted the importance of these Multi Year Resistance nodes.

DJIA Yearly chart

It took some time to play out - we had the expected market volatility, we had iran missile strikes, Trade Wars, but finally, it was the Corona Virus that triggered the recent market sell off.

But crucially to understand the magnitude of these moves, you have to understand 2 things.

1) The Significance of Multi Year resistance nodes. 

2) Understanding of market mechanics and how markets work

We wont be covering them here. 

Joe DiNapoli and I did a webinar together to highlight the above.

You will want to check it out!

I will also be doing some lessons based on the trading that took place during the entire COV19...

2000 point drop on the DOW - within 2 days.

And that was right after the markets made new all time highs last week.

Why?

1. Multi-year Resistance Nodes kicked in.

2. WEEKLY DRPO Sell Signal + Weekly MACDP sell

3. Pandemic knocking on the door with COV19 ( S.Korea, Japan, Iran, Italy )

Do we need any more reasons for this selloff?

The technical picture clearly explains it.

The 'mystery sell off' started Friday - when CNBC anchors were commenting that there was no reason for the late sellof on Friday.

I have been commenting for weeks now - that the market is mis-reading the risks and potential impact of COV19 on the global economy - but we trade price, not fundamentals, as such I go long if technicals are bullish, I go short if technicals are bearish.

This reversal happened in 2 days - 2000 point drop - that is how fast market sentiment can change. For the causal investor/trader it cab be difficult to react if you were not prepared or mentally trained to react.

Every...

Markets finally recognized the risks COV19 have on the global economy, with the DJIA falling by more than 1000 points on Monday Trading.

This was just after DJIA made new all time highs just last week.

South Korea saw new cases of infections skyrocket in just a couple of days. Italy potentially is following a similar path, with a sudden increase to 230!

Both highlights just how contagious the COV19 virus is, the importance of strong government action  to contain the spread of the virus, and most importantly, if left unchecked, how easy this epidemic can soon turn into a global pandemic.

If we start seeing these sudden increases in more countries, we will sooner rather than later, have a pandemic on our hands.

So, what is wallstreet telling us.

I will show you 2 charts.

DJIA Yearly charts

Price 'reacting' off MULTI YEAR resistance nodes on the DJIA ( 1000 point single day drop an understatement ), on the back of a potential global pandemic.

ES weekly 

Weekly DRPO sell...

We are in uncharted territory, with the Novel Corona Virus.

First - the fear that China was under-reporting cases was realized.

Second - new inferences should be made to the risk of spread if this epidemic ever becomes a pandemic. The number clearly shows that this is far more contagious than we are led to believe. which highlights the importance of containment efforts by governments - and ultimately to our very own well-being.

What is interesting - is wallstreet's reaction to all of this.

At 6:50pm New York Time - this 60K news hit the news wire :

The market quickly traded lower - with strong thrust.

It made a  short retracement back to known resistance nodes, ( red and green resistance lines - F3 and W OP ).

This was when I managed to short  the market.

( I sent out the post as it happened )

Price hit our pre-calculated K confluence support node during European trading,

when I not only closed my shorts, but reversed and went long the market.

This...

New cases for the corona virus rose sharply in China, 

Nearly 15,000 new cases have been reported in a 24-hour period, taking the total number of cases to just under 60,000.

To get an idea of the significance of this, the figure for confirmed new cases for Wednesday was 2,015.

In addition to the rise of new cases, there has also been a significant rise in the death toll in the past 24 hours. More than 245 deaths were recorded on Wednesday (figures published on Thursday). This compares with 97 deaths the previous day. 

The big rise in figures today cast a shadow on Beijing’s touted “positive results” from efforts to contain the virus. President Xi Jinping had chaired a meeting of the ruling Politburo Standing Committee after figures showed that the number of new cases dropped on Tuesday and Wednesday.

Wallstreet will likely reassess the economic impact...