Context: A difficult Big Hold from Lower to Higher pays off. I am rewarded. You are rewarded. We are rewarded.
Special Deal at the bottom of the email to celebrate this. As discussed earlier, I share Special Deals when I have a market view that plays out in a favorable way for everyone. First, some market and psychology commentary.
Folks,
The last 3 weeks in the markets have seriously tested my/our patience. After 3 straight weeks of straight rejection from weekly range highs of NQ 21900-22000 (equivalent to QQQ ETF 532-534) we finally broke through.
The Bull Market has an extremely powerful way of staging shakeouts so intense that even the most fervent believers (myself included) may have feelings of doubt. It has the power to shake people out at a loss, and then violently resume its uptrend in ways that may be missed if someone blinked.
This is on full display as the CNN Fear & Greed index remains mired in fear while the AAII sentiment index went to the most bearish reading at 42%.
What happened in the last 3 weeks?
DeepSeek
Canada & Mexico tariff threats (set to be revisited in early March)
Hot CPI
Every single one of these events had the opportunity to end the bullish sequence that I was looking for (which was that at the very least, we make some sort of weekly range breakout).
During this period of time, looking back, I should have scalped the range rather than Hold a big long position. Holding a large position during this period of time was very difficult. Like I’ve said in previous notes, trading is not as glorious as many influencers make it seem. It IS tough AF. The outcomes may be awesome, but the psychological toil to get there is something that is not discussed enough.
Anyway…
The key line item I’ve been telling members almost every single day over the past 3 weeks is this: Hold for Higher until we get near the recent Weekly Range Highs.
The chaos created by the situation(s) above provided the necessary ingredients to powder keg us back up to a price region that makes people scratch heads.
Is this rally supported by improving macro? Questionable, but I’m not going to comment. If anything, we’re seeing a capital flight to safety to Europe and Hang Seng as policy there is a bit more stable than the U.S.
But I don’t make the rules, and I can only provide opinion to members based on price action. 80% of my decision making comes from watching the tape and DCF analysis. 20% of my decision making comes from macro.
Now that we’ve made our first poke above weekly range, I am taking a big trim. I’m not doing anything in 401K style accounts, but for trading accounts, I see no reason why this isn’t a trim area.
I see an equal chance that we melt up another 500-600 points on the Nasdaq OR a “look above and Fail”, which is a very simple way of market makers saying “here’s your lil breakout, that’s it, we’re going back down.” My DCF models support some further modest upside but not a big massive breakout.
At this stage, Part 1 of my bullish thesis has materialized (see Weekly Range highs retested with slight breakout discussed during Deepseek Lows) and will have to rely on runners to carry me forward if we do melt up.
Whether Part 2 (melt up far beyond here) happens is something I have to evaluate later.
Members, congratulations on Holding trading positions through to today’s breakout. Not ONE member asked me whether it’s “time for Puts, time to short, time to sell everything”. Thank you for trusting my process.
To that, I am honestly really happy for all of you.
Folks know that my specialty is patient/thoughtful/conviction Dip Buying at DCF tested levels or collectively, at the QQQ/SPY or ES/NQ level. I am NO good at shorting. Please do NOT ask me for when to buy Puts and short the market. That is not something I’m good at.
This recent context is exactly what I meant Hold for Higher when I said that over and over again in Whatsapp.
However - It is now time to protect trading positions while leaving exposure for upside, so taking significant leverage off the table is officially my opinion.
If one is still very risk on, to capture upside from here, Sell Puts or at most be “fully invested” with in stocks.
No 3:1 or 2:1 leverage, or anything like that. We’ll revisit leverage if/once we see range lows again. We’re at range highs.
Join us for some more strategy on when to take conviction positions in QQQ ETF (or its cousin MNQ) or SPY ETF (MES) when the opportunity comes.
I send out Pre-Market & Daily Plans on WhatsApp from Monday-Thursday. These plans take no longer than 1-2 minutes to read. Roughly 85% of the time, members know my favorite phrase is Hold.
15% of the time, when I comment that it’s time to Add or it’s time to Reduce, I take swift decisive action and do the same exact thing I discuss in WhatsApp.
These notes, if used/understood correctly, should be very powerful in the hands of someone who has patience, a long-term perspective, and risk tolerance.
