Fundamentals + Technicals = Professional Trading

Hello traders,

I hope you’ve all had a good week.

Last Friday the US stock market closed at a new record high. However, the past few days have seen profit taking on speculation that the Federal Reserve may not be as accommodative as hoped with their pending round of financial support for an economy left scarred by covid-19. Alas, the S&P 500 (along with other major indices) was looking a little over extended with a daily RSI reading above 70, so it came as no surprise that this somewhat disappointing news triggered a correction. Here’s the chart:

The situation becomes clearer with the help of Fibonacci retracements (check out my tutorial in this week’s video on YouTube). The higher arrow shows confluent resistance levels just below 3700, which were tested with a coincident overbought RSI condition (making it a little harder to overcome in the short term). The lower arrow marks the previous high, which may now act as support if the current correction continues. Should it get there, I will be watching for a reaction which could signal a potential bottom. Note, the RSI is no longer overbought.

But what about the Checklist?, I hear you ask! Well, I can reveal that the fundamentals are still looking positive, despite the score having come in a bit this month. Save for the overbought extreme, price has been headed in the same direction, so I will be looking at any selloff this month as a potential buying opportunity (note that we updated all of our Checklists on the 25th of November, slightly ahead of month-end).

Turning our attention elsewhere, my past couple of posts have focused on gold, which appeared to me as the best looking setup as we began the new month. Having previously omitted some of the numbers on our Checklist (as a courtesy to our paid Trading Club members), I am pleased to be able to share them here with you now. As you can see, our process pointed towards owning gold in December with a score of +2.5.

Although there has been selling in the past few days, along with stocks as part of the QE trade, the Checklist helped us to correctly identify the setup at the beginning of the month when the market was oversold at the 50% Fibonacci retracement level. This combination of fundamentals and technicals enabled us to nail the low and see a $100 appreciation in the price of gold over the next few days.

But the highlight of this week’s Trading Club video analysis were some brilliant trades in currencies during the month so far. If you would like to join us for our analysis in real-time including new insights each week, or learn from the ground up with Lex in our MDT online course and take your financial knowledge to the next level right away!

Have a great weekend,

James

(PS Here’s the link to our latest video on YouTube)

Disclaimer: For educational purposes only. Even though we do our best to provide reliable data, you should not trade based on this information. For more information go to www.milliondollartraders.com

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