I’m writing this late on Thursday evening as I’m off the desk tomorrow for ‘pressing business’ (the Christmas party) and a weekend in London catching up with old friends. After many years of working in the City, I must say it is a privilege (and increasingly I feel, an advantage) to have some distance from the noise of the financial capital. Although I am down regularly for business on the fund management side, my new base back in my Yorkshire hometown gives me a great deal more space for independent thought. It is all too easy to become conditioned towards ‘group think’, as is currently evident in the key indices when looking at the charts or turning on the financial TV to hear endless coverage of the inverted yield curve (heaven forbid you should succumb to the latter!).
What I’m of course getting at is the benefit of adopting an independent and objective framework for analysing markets in your trading process. As regular readers of this blog will know, Lex and I share our process in the form of the market Checklists that we have developed for Trading Club members and cover everything from equities and crude oil, to currencies and gold. With markets becoming increasingly volatile and particularly challenging for traditional 'long only’ or 'buy and hold' investors (apparently 90% of asset classes have posted negative returns in 2018) our Checklists are becoming an increasingly valuable asset to have in your trading! Let me show you how...
On October 1st our Crude Oil Checklist turned negative with a very strong bearish score of -5. That marked the peak around $77 before a >30% decline towards $50.
Then, on November 30th, the Checklist turned neutral (ish) with a significant improvement to -1 indicating that the selling was due at least a pause. With previously bullish hedge fund managers feeling the pain and cancelling their Christmas vacations to the Caribbean, it was likely that crude would find support around $50, as it did. Here you can see the factors we assessed to qualify this.
This is probably the one chart you don’t need me to remind you of here, but as its so beautiful, here’s our short from 1.27 to 1.25 since the latest Monthly Checklist Report report was published exclusively for Trading Club members on November 29th. Lovely!
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