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Monthly Digest | October 2020

Analyzing the key trends, events, and factors that drove market behavior in October 2020. Let's explore the pages of November 2020's trading chronicle together, unlocking the secrets that unfolded in the realm of stocks and investments.

01 October 2020

Take a guess whos about to break higher?

OJ has a ton of commercial buying coming in to this market

Spread trade... Short the long end. Long the short end

And old turkey said “it’s a bull market you know”

Lumber finally came in to the zone today

“So you think that money is the root of all evil? . . . Have you ever asked what is the root of money? Money is a tool of exchange, which can’t exist unless there are goods produced and men able to produce them. Money is the material shape of the principle that men who wish to deal with one another must deal by trade and give value for value. Money is not the tool of the moochers, who claim your product by tears, or of the looters, who take it from you by force. Money is made possible only by the men who produce. Is this what you consider evil?”

Coffee stopped again.

First days of the month are usually bullish except for August and October. Statistically. Watch for a gap and crap or a gap and go. Which with the way oil and copper are acting today.. a fall after the open wouldn’t be surprising

Currencies all hitting resistance. Once again I’ll say when I’m changing positions. I think it’s important to always know what’s going on statistically

The move is a bit extended off the lows I wouldnt be surprised if we come down to that high volume node.

Lumber. Looking for a close above the 10 EMA today

BPNYA buy signal

If you are bullish on China, you are bullish on copper

Trade weighted dollar. If you are bullish on copper you are bullish on growth ticking up... somewhere

If you are bullish on copper you are bullish on inflation

Copper has one major issue right now though. The commercials are net short. However, there are times where this happens at the begining of a trend.

02 October 2020

Short term things to take note of

Miners hit pivot. Rejected.

Primary pivot on the dollar. 93.42

I love the way this is building

Talk about overnight stops...

When you have that one trade that you can’t cut...

03 October 2020

Choppy way to end the week but the PMO model gave a buy signal on thursday.

Bull bear model bottomed

Want to see something weird

conflicting signals on the vix model

The curve is looking very different than it was

Still divergence even after a nasty sell off on friday. A break below that zone and its a sell. A break above and it is a buy...

Major divergence on Natty. Sit out for now

SPX breadth

BTC mechanical system is still in a sell but it is very close to a buy!

04 October 2020

Gasoline demand is at the highest level in 2020. Higher than Labor day weekend.

What we will be doing for this month in the futures account is focusing on selling volatility

There are times where markets don’t trend and long or short your systems will get chopped to death.

But if we look at the vix curve.

We are seeing that selling vol is the “over under” trade. VIX around 30 before an election. That’s abnormal.

But it puts us in a place to sell OTM spread or naked calls or puts. If we watch how vol has gone in the last few weeks. Huge pops in the morning. Selling off throughout the day

I wouldn’t get too fancy with it and I will still be taking my signals on my trend systems. But during a certain amount of chop my volatility selling systems kick in. Go for November options. Selling OTM

In my opinion this is so apparent.

Will be looking to buy a break out in rice this week. The model for rough rice has a filter signal but it’s also based on a 50 day closing high. It’s close to getting hit as China goes in to another famine. Similar to a trade in the German currency by druckenmiller on the theory that Germans were terrified of hyperinflation. If you saw the history of China and maos great famine you know what I’m talking about.

Rice, corn, soybeans, hogs, wheat are the easy plays.

One addition I’d add to the weekend report. We are really close to a completely defensive shift it’s either a time to do nothing or be very cautious.

05 October 2020

Coffee weekly. Watch it this week.

I am adding to the position on a break out of this pattern. Buy stop order placed above the red zone


06 October 2020

Gold back in the bullish part of the structure.

NYAD getting close to new highs

Rice broke out today

XBI risk on coming in to the market still

SLV strong volume candle today

Gold showing volume rising faster than price.

GDX also working on a new trend model. Thats why the bands look odd

Market structure is very important. Understanding these 3 bar patterns and how they usually lead to a turning point

The widow maker trade has possibly changed trend

HAL gave a buy signal today.

December hogs buy stop hit today

Gold is up against resistance. But if it breaks it. It’s telling us something. Buy stops above resistance can be a great way to take advantage of break outs. If the move does not happen... o well

If it does. You’re in.

Junk bonds are really strong. Good risk on sign for the market

Time to start getting defensive.

Major curve ball thrown at us. If the Russell opens lower tomorrow we have a 2B sell. If the long bonds move up the curve is going to get flatter. Money supply can get tight really fast. That was not the same as the president has the flu news.

07 October 2020

Didn’t change up any trades today even with the smash. I don’t like changing strategies on news driven breaks

Still on the cusp here of a change and looking to follow the models and sell OTM vol.

Ag is trending hard this week. No one is talking about why yet which leads me to believe that we are early

Trend funds will get a short signal in bonds if they break down a little more. Major funds have 100-200-300 day systems. That would be a long term low and flip the trend models for the first time since 2018

Yields rising on the long end. Good for copper

08 October 2020

Full buy signal still

COP one of my top picks in energy. Looking to buy the break

And old turkey said

I can say one thing about female traders. They never seem to feel the need to put on the macho trades. Males, we have a tendency of blowing up accounts. Having large draw downs and so on

Females really seem to understand the risk control aspect of trading. Everyone thinks of the part in interviews where druckenmiller talks about being brave. About being a pig

“It takes courage to be a pig”

But they forget when he says that he tries to grind his way to a good year first and then bet big

I still use Trader Vic’s model. In pursuit of superior returns. Because if you don’t have large draw downs you are positioned to make big returns when the market is in your favor.

The creation of a system that lets you take advantage of luck by putting yourself in the right place at the right time is important

I don’t dine on swine but damn.

Small caps in a new zone. Can’t get bearish yet

09 October 2020

Very good video on why understanding your system and your plan is important

2 over 80% upside days in breadth. Bullish sign.

Bitcoin trend model in a buy signal

If you click your heals 3 times and say there is no inflation... you might be right

I know that very few trade these because of the account size you need to do so.  But... it’s incredibly important to watch them.

Nat gas is close to a one year high. That would absolutely be a buy signal for long term trend funds

Covering a possibly 5-10 year short

This is from Mark Minervini. 1995

Market wizard. I always find it interesting that when you see what most of these guys do. It’s volatility squeeze break outs or new highs. When you look at new traders. They talk about how amazing they were when they bought a dip.

So I mentioned that I was working on a new model. 2 STD band up and 1 STD band down. Bitcoin is so volatile that finding anything that has a win rate above 50% is nearly impossible. On the shallow time frame 2017-2020 the win rate is over 70%. Very interesting easy to follow system.

IWM small caps

EEM. You want to see these leading the moves.

Gold got above the break out zone today

Got knocked out of my rice position. Check this stop fishing program out lol

SPX AD line

Very close to closing at and all time closing high for the week

One of our long term holdings

October 10 2020

Another breadth thrust signal today - Chart of the Day – Friday, October 9th, 2020

2000 election volatility

VIX Nov vs Oct futs spread

A lot of good stuff in here. Also he talks about the permanent portfolio being a great allocation idea here which is something that I have talked about and agree with. - Jeffrey Gundlach -- Waiting for the Next Big Trade

October 11 2020

Still one of the best buy and sell signals to date.

Put call ratio in the danger zone. VVIX elevated but the VIX is headed to bed. Mixed signals still

Bull bear indicator full bull

NDX Volume AD line

RSP (equal weight SPX) should lead to the downside in a weak market and to the upside in a strong market.

BTC Buy stops were hit last week and both systems have buy signals

Biotechs still leading. Risk on for the stock market

Soybeans COT positioning bearish but dont fight the tape.

 Silver to gold ration first green bar.

Thats new

Nat gas in a new bull market... still

sectors one month

10 days

October 12 2020

China devalued the yuan this weekend which should give the USD some extra strength this week. Something to keep an eye on

Keep in mind when China leads. Tech leads

Sugar is making one hell of a move. 1970s here we come?

Nick Radge had an interesting back test

31 ten days

When something breaks out over a moving average the win rate goes up if you wait for it to close above it after 5 days. I have adapted this for break outs with similar results. So lets see if we close this week over 1933 in spot

Number 31 from the weekend report might have been missing yesterday so I reposted it

They all heard me

That was a phenomenal gap above the yearly pivot

13 October 2020

$ZC_F hit the primary target and bounced off of it. Strong resistance at yearly pivots.

Short term traders: Watch closely for a turnaround Tuesday situation today. A big gap open to fade.

Also oil keeps getting rejected from the lows. How the price reacts to smack downs is very important

Sugar is also up again today

What if the banks all have blow out earnings?

Cycles have two buying opportunities this month

The begining of october as we talked about. The other is October 16-20. These are just times to look for signals

Dollar update

Puts on gold have an extreme premium this morning. Good time to sell a bull put spread.

“It dawned on me this weekend that the dollar should fall soon and hard: The Fed has fixed rates at zero for at least 3 years, by their pledge. Therefore, as stimulus flows by the hundreds of billions into the economy in the form of direct deposits, payroll substitutes loans and grants, the burden of financial adjustment for the increase in the supply of script falls 100% on the shoulders of FX values.”

- J.J.

Biotechs new all time high

One thing that changed my mind on cycles and trend trading was the simple idea of buying a 100 day high. It’s so counterintuitive compared to what you think you should do. But what I found was, every market had a number that seemed to work. A number for bull moves and bear moves.

Golds number was 100 but it takes a certain mindset to buy that high and ride out that volatility.

Miners turned up hard today and will most likely drag metals with it

14 October 2020

still in full buy signal

NZD looks ready to run 3 bar triangle above the primary pivot.

Time to sell naked puts yet on MES?

Check out "Danger Zone (From "Top Gun" Original Soundtrack)" by Kenny Loggins on Amazon Music.

15 October 2020

One thing that I’ll add - SMH XHB XME RAGING BULL

“If it ends the day up use this”. Down “demand worries”. What a joke!

Looking to take advantage of the vol this Nothing by selling puts on the SPX. I want to see some strength at the open first and not a free fall

Entered puts sold on MES

Bitcoin and copper are extremely strong today which tells us that there is liquidity somewhere.

That’s a major fucking reversal candle on oil today

Perfect time to short the shit out of bonds.

16 October 2020

Fed injected 77 billion. Very close to new highs in the fed balance sheet

Look at the top 5 sectors on an ROC basis

New highs are much broader