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In This Issue:
Trading Season Is Back… For Now
Bitcoin Is Consolidating
EGLD And MATIC Still Look Good
Stocks See Relief Bounce After Painful Week
More On Trading Alpha
The Alleged Truth Behind CoinFLEX
Cynthia Lummis Calls For Charges Against Binance & Tether
Court Approves Coinbase’s Oral Argument
Bitcoin Is Up 100% This Year, Will It Shoot Higher?
Trading Season Is Back… For Now
It feels like an eternity has passed since I have felt interested in trading crypto.
For those of you who have been with us since day one, you're well aware that the foundation of this newsletter lies in the principles of trading and, naturally, the trades themselves. The inaugural edition was sent on November 26, 2019, an opportune moment as most cryptocurrencies were establishing support and commencing their ascent into the 2020 bull market.
In that first edition, there was no introduction - it was straight to business. The newsletter was solely made up of my trades and setups, which was the theme here in the early days. Since then, I've undergone an evolution, developing new perspectives on the market and refining strategies that align better with my lifestyle, interests, and expertise. However, amid the market's highs and lows, I've never completely strayed from this letter’s original purpose.
I’m not making any promises, but I can confirm that I am beginning to see a glimmer of hope on the charts as the market is finally bestowing upon us trade opportunities. By no means am I in a rush to start slinging trades left and right, especially when the recent uptrend is predominantly driven by hype rather than concrete news. However, my curiosity has been piqued, which is why I've started to plant some initial seeds by collaborating with the seasoned trader Wick, better known as ZeroHedge. This partnership aims to provide all of you with a fresh perspective as I gradually re-engage in the trading scene.
Naturally, I will continue to prioritize my role as an investor. However, as trading opportunities unfold, I intend to gradually participate, as I have been this week. In the interim, I'd like to revisit a few of the original pieces of trading advice that I originally shared when this newsletter first began. Enjoy.
Treat Trading Like A Business
If you are a full-time trader, then you need to approach trading like a business. Create a business plan and edit it monthly. Keep a trade journal and study your past mistakes. Have specific rules for taking profit to pay your bills and cover expenses. You are not a professional trader unless you can earn enough reliably to live your life on the income.
Set achievable goals and incorporate daily activities (studying markets, reading financial news, paper trading, etc.) to keep your emotions at bay. Set a fixed daily schedule of activities, making sure that you are not aimlessly staring at a screen all day, wasting your precious time.
Create a monthly earnings report. And a quarterly earnings report. Tweak your strategy to reach your short and long-term goals.
You will be less likely to force trades out of boredom or because you feel internal pressure to be productive. Without a plan, you are likely to wake up each morning and force bad trades with no real direction.
Do Not Average Down
A common grave mistake many traders make is Averaging Down: buying more of the coin as the price drops with the logic that a good thing is now cheaper (an even better bargain). This logic applies to investing, not to trading.
A trader has an invalidation level for their idea — price dropping significantly should invalidate their trade and cause their stop loss to fire! Most beginners do not understand this and dig a deeper hole than necessary.
The only time you average down is when you already have set orders in place to fill a full position. Never add to a loser if that was not your plan. That’s how you become a bag holder and ‘passionate community member.’
Are You Undercapitalized?
As the saying goes, it takes money to make money. Many beginning traders are blinded by the promise of making boatloads of cash without leaving the comfort of their couches. This is a false reality unless they already have significant capital to trade with.
A trader who wants to be a professional needs to be able to support their entire life with trading - that means their profit must cover their living expenses, without eating into their trading capital. In most parts of the world, this requires at least $50,000 - $100,000 to trade with, and a steady profit of 10% monthly.
In reality, this is very difficult to achieve. As a result, many beginning traders find themselves under a great deal of stress when their expected trading returns fail to align with the actual results they produce.
Peter Brandt recommends having a FULL TWO YEARS of living expenses set aside before you even start trading, just in case you are not profitable and have a bad run. That does not even include your capital for trading.
If you want to be a pro trader and have a real chance at success, you have to start with a large stack.
Catch-22
Bitcoin Is Consolidating
Bitcoin is consolidating nicely on decreasing volume after the major move up. There’s nothing really to do at the moment. Long should be interested in a dip to $33,000 (tight stop below) or a break and close above $35,157, while bears want to either attempt to short $35,000 (tight stop above) or a break down of $33,000.
In my opinion, the market remains EXTREMELY bullish as long as Bitcoin holds the $31,000 area on higher time frames.
EGLD And MATIC Still Look Good
For those who are new here, I share SETUPS and not SIGNALS. These are ideas that I am watching - if a certain thing happens, then the trade triggers. I am not telling you what to buy or when. I am showing you how I am watching certain charts and what has to happen for me to take a trade.
I am already interest in EGLD, so it is nice to see confluence using Trading Alpha. As you can see, the green dots are intact and there are two green arrows (which are rare) over the past few days. Price is trading above the track line. Easy. All bullish signals are currently intact.
My normal strategy still says to wait for a break and close above $29.24 to get excited, since we are currently at resistance. Nothing has changed there since I shared this earlier this week.
I have repeatedly shared my Matic chart (in blue and grey) but am seeing confluence with Trading Alpha as well. As you can see, we have green dots, a break above the track line and now two green arrows printed in the past 4 days. It looks to me like any dip here is for buying, as I expect a much higher move assuming the market stays hot. Yes, this is my own TA chart, not from Wick. I am actively using the indicators, as I find them extremely useful.
Here is my chart for reference, where we had the clean break and retest of both descending and horizontal support. .94 seems like a very reasonable target.
Stocks See Relief Bounce After Painful Week
U.S. equity futures experienced an uptick after a challenging week, with Amazon and Intel showcasing strong earnings. This positive shift came in the wake of crude oil prices rising due to U.S. strikes on facilities associated with Iran in Syria. Despite recent setbacks, the Nasdaq saw an increase of 0.9%, while both Intel and Amazon witnessed significant pre-market trading surges of 7.7% and 6% respectively.
The current earnings season has produced varied results. While a majority of U.S. companies surpassed estimates, more businesses than usual have reported concerns regarding decreasing consumer demand and an unstable economic backdrop. However, recent data indicates that price pressures in the U.S. are easing amidst steady economic growth.
Attention is now pivoting to upcoming reports, including the Federal Reserve's key measure of price pressures. This data will influence expectations regarding the central bank's potential actions in the next week. Additionally, earnings reports from major oil companies like Exxon Mobil and Chevron are on the horizon.
Analyst Hebe Chen from IG Markets in Melbourne suggests that robust U.S. growth and impressive earnings from tech giants could offer some relief to anxious investors. The upcoming FOMC meeting is also anticipated to set the financial tone for the rest of the year.
In European market news, the Stoxx Europe 600 remained stable. Notable shifts included French company Sanofi's stock plummeting due to missed earnings and a pessimistic outlook, while energy majors saw a boost as Brent crude prices surpassed $90 a barrel. Several other European corporations experienced stock fluctuations following their respective earnings announcements.
Asian markets, especially in Hong Kong and Japan, displayed positive momentum, with mainland Chinese shares also showing growth.
In currency news, the U.S. dollar declined for the first time in four days, while the Japanese yen remained stable. Geopolitical developments in the Middle East are also being closely monitored by traders, especially in light of recent military actions and escalating tensions
Key events this week:
US PCE deflator, personal spending and income, University of Michigan consumer sentiment, Friday
Exxon Mobil earnings, Friday
Some of the main moves in markets:
Stocks
The Stoxx Europe 600 was little changed as of 10:42 a.m. London time
S&P 500 futures rose 0.5%
Nasdaq 100 futures rose 0.9%
Futures on the Dow Jones Industrial Average rose 0.2%
The MSCI Asia Pacific Index rose 1.3%
The MSCI Emerging Markets Index rose 1%
Currencies
The Bloomberg Dollar Spot Index fell 0.2%
The euro was little changed at $1.0562
The Japanese yen rose 0.3% to 150.02 per dollar
The offshore yuan was little changed at 7.3260 per dollar
The British pound was little changed at $1.2140
Cryptocurrencies
Bitcoin fell 0.3% to $34,098.59
Ether fell 0.6% to $1,787.01
Bonds
The yield on 10-year Treasuries advanced one basis point to 4.86%
Germany’s 10-year yield declined three basis points to 2.83%
Britain’s 10-year yield declined two basis points to 4.57%
Commodities
Brent crude rose 2.5% to $90.15 a barrel
Spot gold rose 0.1% to $1,987.07 an ounce
More On Trading Alpha
What a week to introduce Wick’s (also known as @ZeroHedge) indicators and trade setups to the newsletter! The market has finally provided us with some unmistakable setups, and those who were attentive seized the opportunity. In addition to sharing Wick's charts, I will occasionally delve deeper into the details of his two subscription offerings: the monthly and annual Trading Alpha plans. The setups here will remain free, but I know that a lot of you are interested in exploring this on your own.
From Wick:
The major difference between the monthly and yearly subscriptions is that the two most popular indicators are only in the yearly subscription. I am referring to the Alpha Dots, and Track Line. These are only in the yearly subscription. The yearly subscription members get access to our VIP channels with me (Wick), vs only getting access to the free channels with the monthly subscription. VIP access is a major value add to the yearly subs.
Alpha Bundle Monthly Includes :
Alpha Trend suite indicators (Minus the Dots and Track Line)
HTF Suite
LTF Suite
Alpha RSI
Alpha Thrust
Alpha Volume
Access to free discord channels (Not VIP channels)
Alpha Bundle Yearly Includes :
Alpha Trend suite indicators (With the Dots and Track Line)
HTF Suite
LTF Suite
Alpha RSI
Alpha Thrust
Alpha Volume
Access to VIP Discord channels (Great value add for them)
If you like this analysis and want more like it, use the link HERE, to sign up for Trading Alpha.
The Alleged Truth Behind CoinFLEX
To be clear, this could be FUD and we are digging in to try to substantiate this story.
If potential lies make you uneasy, feel free to skip this segment. A twitter thread from a brand new twitter account has appeared, which potentially sheds some light on he reality surrounding CoinFLEX, tracing back to January of this year. In that month, the cryptocurrency community was rattled by the emergence of GTX, an exchange designed for creditors to trade their bankruptcy claims. It was founded by Su Zhu, Kyle Davies, and Mark Lamb. Initially, many were skeptical about the intentions of this trio and whether they were truly addressing any wrongs. Nevertheless, GTX persevered and underwent a rebranding, becoming 'OPNX.' This rebranding brought another questionable figure into the picture, Roger Ver, and, regrettably, in light of new news, OPNX now appears to be merely another cryptocurrency shell created by the involved parties with ulterior motives. The most disheartening aspect is that CoinFlex, apart from the bad actors, seems to have been exploited at the expense of creditors. While the intricacies of this matter are quite extensive, if you wish to delve deeper, I recommend starting with this thread and using the link I've provided above.
Cynthia Lummis Calls For Charges Against Binance & Tether
The controversy stirred by the WSJ's coverage of false information regarding cryptocurrency's alleged role in facilitating terrorist funding has now triggered far-reaching and detrimental consequences. Succumbing to this misinformation or private alliances, Senator Cynthia Lummis has written a letter urging the DOJ to conclude its investigation and explore potential criminal charges against Binance and Tether. In her argument, Cynthia Lummis cites direct involvement in 'facilitating illicit financing activity' as the basis for her concerns, which we know is exaggerated and mostly false. Cynthia Lummis has been known to be, ‘one of the good guys’ but after seeing this concerted attack on Binance and Tether, I am now scratching my head. Will Senator Cynthia Lummis backpedal on this one or are her true colors shining? Time will tell.
Court Approves Coinbase’s Oral Argument
The U.S. District Court has granted Coinbase the opportunity to present oral arguments in its case against the U.S. scheduled for January 17. The central issue at hand revolves around the classification of tokens and staking programs as 'investment contracts' falling under the jurisdiction of the SEC and securities laws. Coinbase has diligently prepared for this moment, long before the SEC filed a lawsuit against them, and I have every confidence that Coinbase will prevail in court. Their stance has been openly communicated, and they enjoy substantial support from a large following. From a non-legal observer's perspective, it's difficult for me to envision a scenario in which Coinbase loses to the SEC.
Bitcoin Is Up 100% This Year, Will It Shoot Higher?
Join Joshua Frank, founder and CEO of the Tie, and Dan from The Chart Guys, as we break down the latest in crypto.
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The views and opinions expressed here are solely my own and should in no way be interpreted as financial advice. Every investment and trading move involves risk. You should conduct your own research when making a decision. I am not a financial advisor. Nothing contained in this e-mail constitutes or shall be construed as an offering of financial instruments or as investment advice or recommendations of an investment strategy or whether or not to "Buy," "Sell," or "Hold" an investment.