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Mike Tyson Style Knockout?


Judging by the emails and messages I’m getting, there’s soooo much pain out there just now, a lot of you are waking up with that horrible feeling in the pit of your stomach, watching the pre-market tanking, you’re trapped, and you’re probably asking yourselves why did you take that stupid position the day before… I’ve been there and I know it sucks but it really doesn’t have to be that way.

The Markets are taking a rather large Mike Tyson beat down at the moment… the question really is (for those of you old enough to remember), can the Market stage a Buster Douglas comeback and move forward in the face of adversity? For those of you too young to remember the Invincible Mike Tyson get knocked out at a time he was considered indestructible, you might prefer to just look to last week, and Tyson Fury’s miracle 12th round recovery vs Deontay Wilder - that’s really where the markets are right now… they’re flat on their back, needing a miracle.

So what’s price telling us at the moment? (which is what I’m concerned with)

1st thing to say, and this is something that I think is lost on many… the news headlines DO NOT matter, whatever nonsense Bloomberg / CNBC / Cramer give you as the reasons for the drop simply do not matter, you only need to look at price… if you’re told the latest 500 point DOW drop is down to Trump taking a dump, would you believe it? Of course not… but this is the reality of what we’re fed… media outlets really do make money by justifying nonsense and getting your click… does nobody realize that these “news events” all tie in with key support and resistance levels in the Market yet?

Most of you will know I’ve been incredibly cautious for around 3 months, and there are numerous reasons for this, I’m really not in this market for little $2/$3 moves… or the stress of trading volatile times and constant management of positions - I’ll leave that to the 95% of Day Traders that lose.

With that said, as part of my weekend analysis, in my opinion, there are 4 Charts you all need to be aware of.

Exhibit A - The DOW (The most important)

Dow 8th December 2018.png

As we can see. there is a little bit of a ways to go here, but it’s not outwith the realms of possibility, that we see the fast approaching support level break, followed by further decline.

Exhibit B - S&P500

SPDR S&P 500 8th December 2018.png

Again, very similar look to the DOW, and very close to a break down as we’re at a key area of support, however the warning signs are there as the market sentiment is now most definitely bearish.

Exhibit C - QQQ - Tech

QQQ 8th December 2018.png

Again, the sentiment is bearish, and we’re fast approaching key levels of support, this is not an environment we want to be buying Tech right now… I’m not a gambler, and I know that the market can drop much further than most of you think it can… if you’re taking Buy positions in Tech right now, there’s a very real danger of having that holy shit moment, why the hell did I buy those…

Lastly - Small Caps (Russell 2000 - IWM)

Russell 2000 8th December 2018.png

The Russell may be the 1 to get the party started… as you can see, it’s right there… teasing everyone, and if this breaks next week, it would certainly make sense to me that if 2000 stocks start a sharp decline, this will induce selling in other areas of the market..

As you can see, it’s not all sweetness and rainbows out there, and there’s a VERY real danger of further sharp market declines.

I’m not in this game for short term excitement, I’m in it to make money… for those out there day trading short term moves… I’d urge you to reconsider your approach, and exercise patience… cash is king at the moment, otherwise all those Wall Street algorithms will hoover up your positions with high volatility.

Despite the warning signs staring us in the face, in the same way you wouldn’t approach a snarling German Shepherd - you need to use common sense.

It obviously isn’t ALL doom and gloom at the moment, we can still see market support at these levels, and we could absolutely get another rally, absolutely it can happen, but it’s not an environment I want to be participating in. Those that want to gamble on a recovery, pay attention to the word “gamble”… that’s what you’re doing.

I’m not a gambler… I’m a disciplined trader.

Yes, It’s boring, but being on the sidelines is the approach to have UNLESS you’re an accomplished short term trader who’s demonstrating an incredible ability to make money in the current environment (which I know many of my clients are demonstrating very well at the moment) - but those who are not as comfortable - the sidelines are certainly boring, but it’s the safe approach, and I’d rather that, than lose 20,30,40,50% of my capital.

I like safe.


Are you tired of endless losses?

Sam McCallumComment