Support turns into Resistance, Back to Support
Welcome to Issue 012 of Masters in Trading Digest.
In today’s FREE MIT Digest, we discuss the recent pullback and subsequent rally in the stock market.
We share key support levels in the Nasdaq, and what to expect now that those levels are held.
Lastly, I thought it was too early for anyone to double an account in 2022, but Magnus proved me wrong! Congrats, Magnus.
Impressive Start to the Year!
Enjoy today’s MIT Digest.
Good investing,
Jonathan
MONDAY MORNING ANALYSIS
The $QQQ (Nasdaq) closed at $379.86 on Jan 07, 2022.
Important support for the week of Jan 07, 2022
- Jan 2022 monthly low = $378.04
- Dec 2021 monthly low = $377.47
This is an EPIC hedge! David, just last week purchased $QQQ options for $1.95 to hedge his trading account. In less than 2 weeks, those hedges (protection) are trading $20.
- Risk $1,950
- Reward $18,000
Congrats, David! Heck of a trade. Phenomenal patience, my friend.
WEDNESDAY MARKET ANALYSIS
$QQQ traded below our crucial band shared Monday between $377 – $378. Once this level was breached, the market reversed and rallied back over this crucial number. This behavior is extremely bullish, and the reason we shared the chart above of the $QQQ in our Discord on Tuesday 01/11/22.
Many clients were able to take short-term positions bullish in the $QQQ after this crucial level proves to be supported.
RELATIVE VALUE TRADING, SIMPLIFIED
Back on November 16th, we shared a blog post, Trading Inflation, Infrastructure, and Metals, that covered the price of metals, and how Copper was dragging behind the relative value of Gold, Silver, and even Platinum.
Below is an updated chart going back 10 years between Copper (HG), Silver (SI), Gold (GC), and Platinum (PL).
Notice the correlation between all 4 instruments?
This is relative value trading. We invest in correlated instruments that break down past correlations.
It’s a simple, focused, and consistent approach to trading the markets.
To benefit from the copper rally, all options clients shared trade ideas in $FCX, $RIO, and/or Copper Futures.
Excellent trades, team!
STAY THE ETHEREUM COURSE
Coins are risky but if you focus on the “big picture” the demand for Ethereum continues to increase. We continue to be extremely bullish Ethereum and believe this pull-back is a great time to add, or to start building a position.
A Few Links to Share –
Opensea.io (Web3.0’s EBay) just raised money at a $13b valuation.
The NFT volume on OpenSea is strong and can be found here
HEARD IN OUR MEMBER DISCORD
Copper.
You don’t need a big account, you just need a bit of patience.
Here’s Pete risking $120 in $RIO, to profit $700.
Great trade, Pete! That’s how we take advantage of the dislocation in the metals market.
FINAL THOUGHTS
WHAT TO EXPECT IN THE NEXT MIT DIGEST
The next issue of the MIT Digest will be released Friday, January 14th, 2022.
On Saturday we are holding a special program on the basics of Futures Trading.
Traders make Futures trading too complicated.
They rely on charts and speculation.
That’s not necessary from our perspective.
Join us this Saturday For a Simplified Approach to Futures Trading
Keep your feedback coming into support@mastersintrading.com. We’re excited to share your feedback along with fantastic suggestions for upcoming issues.
Until then, trade smart and always manage your tail-risk.
Thanks for reading,
Jonathan Rose
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Masters in Trading Digest - Issue 12
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