Weekly Update sample and invite

Hello C2 community! I’m the trade leader for the Ethos Swing strategy which has been trading here for almost 6 months. I’m not one to troll the forums to tout my strategy, but I wanted to make everyone aware that I offer a weekly update via email every Saturday to all of my paid and sim subscribers. This update summarizes the pervious week’s market news and performance, trades that my strategy placed, and my forecasts for the short term. I’ve gotten a lot of positive feedback about these updates and want to make them available to a wider audience.

I’m including today’s full update below so you can easily check it out. If you’re interested in receiving these just sign up as a sim subscriber and I’ll email you the update every Saturday. Even if you don’t subscribe to my strategy I hope you’ll find value in reading these every weekend. Happy trading!

Weekly Update - December 7, 2019
Ethos Swing Strategy

The Best and Worst Trading Days in Two Months

“The last two weeks felt like traders really wanted the market to pull back 2% to 3% to give them an opportunity to buy in at better value” - From last week’s update

“When the three markets make new highs together - the market usually retreats an average of 0.8% then reverses to continue making new highs” - From the November 9th update

Volatility finally entered the market this week - a week after the VIX made a new closing low for the year which can usually foreshadow some short term volatility. The S&P closed down 27 points on Monday after poor manufacturing numbers were reported. On Tuesday the market gapped down another 45 points after Mr. Trump suggested that he might wait until after the election to sign a new trade deal with China.

After seeing the futures reverse Tuesday morning I immediately sent out a message to paying subscribers urging them to hold tight and not panic. There were several clues as to why this sell off was just a shake out and not a reversal. First, as I stated in last week’s update, it felt like the market wanted a small pull back and 2% to 4% is normal when all three indexes hit highs together and the VIX collapses. Second, sentiment and breadth were not at extreme levels. In my experience, without sentiment or breadth at extremes, price usually only reverses on major news. The only news was poor manufacturing data (which we already knew and I detailed last week) and Mr. Trump’s remarks on trade (which have always been buying opportunities). Finally, in a big run up like this there are a number of traders who come late to the game. They’re weak hands who quickly panic when the market opens down and are afraid of another bad December, even though conditions are completely different than last year.

Luckily we stayed calm, analyzed the situation and held tight as mutual funds, pension managers and hedge funds bought the 3% pull back and rode the market to a higher close for the week. Amazingly good jobs numbers helped push the S&P up on Friday and it closed the week higher by 5 points. Ethos Swing was higher by 1/4%.

In the long run this little draw down is positive. My sentiment indicator turned higher from a lower level, suggesting the current trend still has a ways to go. Market breadth held steady despite the two days of selling. None of the economic conditions I discussed last week have changed (the fed, the strong consumer, global recovery, etc.). The resilience of this market this week entices investors sell their bonds and buy stocks. The fact that buyers came in as expected on Tuesday only solidifies my feeling that the market will continue higher into year end. We still may experience some choppiness in the middle of December with the Fed meeting next week and a slew of economic data coming out.

This week is a good representation of how I trade. I believe that price, sentiment and breadth are all related. I trade based on the movement and confirmation of all three components. Bad traders rely only on price which leads to emotional decisions - like selling Tuesday morning. We don’t want be that type of trader. We want to follow the smart money…the funds with the cash to really move the market. Sometimes we can even lead them.

On a personal note, this was the first draw down I’ve experienced with real money subscribers who are trusting me with their investments. I have to be honest and say that I definitely felt the pressure. I treat this strategy with a great deal of responsibility because it’s not only my money I’m risking, but yours as well. It would have been much easier to play it safe and close my position with an 8% draw down, but a 15% gain. That means some late subs would have taken a loss but my C2 stats would have looked extraordinary. I’m trying my absolute hardest to ignore the pressure and trade that same way I have over the past 4 years. This strategy has been extremely successful during my trading career and I don’t want to change anything and risk that success.