Trading Room – Thur 1 Nov 2018
Markets love to surprise and markets love to trap too. The immense skill of an elite trader is to determine which is the likely scenario on the balance of probabilities using the widest array of information available. Common traders will tend to get carried away in media headline news explaining the move AFTER it happened (see this report on “when trades go wrong”)
With market volatility on the rise, do not expect “the same to going forward” for the rest of 2018 and likely in 2019 too. But we are getting ahead.
The US Dow Jones Industrial Average surged 241.1 points to 25,115.7 overnight closing yesterday, which brought its two-day gain to about 650 points. The S&P 500 gained 1.1% to 2,711.7 as consumer discretionary and energy outperformed. The Nasdaq Composite advanced 2.0% to 7,305.90 and briefly climbed out of correction territory.
Likewise, major global markets follow suit and locally, the KLCI rebounded from a low of 1,670 to close at 1,709 over the past few trading days. It was an impressive feat (which was expected).
However, there are strong undercurrents lurking globally. The major US averages posted big losses for the month of October where the S&P 500 lost 6.9%, its biggest one-month slide since September 2011, when it fell 7.2%.
The Dow dropped 5.1% to post its biggest monthly fall since January 2016, when it dropped 5.5%.
The Nasdaq plunged 9.2%, its largest monthly pullback since November 2008, when it shed 10.8%.
But with the volatile month of October over, investors and traders seemed to breathe a sigh of relief. Is it just a correction or is it just a bull trap? There are a few critical considerations that make the recent sell-down and the sharp rebound different from the past. And you need to know the real facts to make an informed evaluation.
As for us, we are relying on our experienced human analysis and machine skill (the Master Algorithm) to read the current market movement and devise an appropriate trading plan in response.
With millions of data and analysis of both the local market and global markets in complete breadth and depth, we are able to get a micro (local) and macro (global) insight that most could not see, something we know that is a powerful advantage our peers do not have.
News and subjective analysis may confuse and make the outlook murky for traders but millions of data will give a crystal-clear picture of the real undercurrent so to speak.
The big data analytics will detect the actual market undercurrents and human psychology that move in herd mentality and its likely the market can’t hide its tracks from the algorithm.
As its mathematically calculated, there is no grey areas and it confirms many observations that various facets of technical and quantitative analysis bring to the table such as price action, volatility, patterns analysis, volume, sentiment, etc.
Should you participate in the current market rebound?
Read carefully the latest mPower Algorithm report out today and decide BEFORE the market moves, not AFTER it happened.