Weekly Update October 17th

Welcome to our Weekly newsletter!

Some encouraging signs but risks remain

Technical’s

US 10Y – Hit my extended target at these levels… also negative divergence showing so we could see a reversal here soon.

USD – Momentum seems to be pointing down – If we don’t correct here I’m only expecting a move to 108. But if we get this move we get a good solid week / two of equity upside.

VIX – Really interesting that last week on a major SPX down day VIX hardly budged. Looking at options flows we had both heavy call and volume AND put volume but on balance, we had put positions closed out. So despite the grim downside move, there wasn’t much bearish activity that leads me to think we have way more downside this week… barring some wild headlines.

SPX – 3500 Is bottom of the range – Should look to long from this level – 3750 – Top of the range. If we can get over 3750 3835 is the next upside target where a large call wall remains. So we’re currently in no man's land but assign a bullish edge here due to the above… specifically VIX, looks like it wants to roll over. This should create equity market buying from the MM

BTC – 18000 / 18500 – Bottom of range – 22000 is currently the top so if we do make a move to the upside, I expect 22k to act as resistance.

Fundamentals

Still weak overall with the main issue still being inflation. I gave my thoughts on this last week but had the CPI been using up-to-date data we would have come in below expectations. Risks also remain around breakages – From the bond market / Credit markets.

Mechanics – Not really seeing anything wild here. Equity funds are still heavily under-exposed, the market is in a ‘’short heavy environment’’ but not enough IMO to spark a major squeeze. If we do see some decent upside here with underlying call buying and SPOT BTC buying then this would be encouraging and would lean towards a ‘’more natural rally’’

On that note for the first time in a while this morning, I see BTC SPOT buying leading the flows… This is encouraging to see but we need more confirmation from the equity market to back up the move.

Social Sentiment – No one seems to have a clue but I assign a slight bearish tilt due to many calling for a ‘’potential final flush’’ – Useless analysis.

So overall I am leaning towards the upside this week but headline risks remain high, particularly around earnings. One horrific headline and we could flush back down. Bar this happening I expect markets to end the week higher but trade with caution. Until I see some bullish flows on equity markets and continued spot buying it’s a nothing move.

Will be eying some ST long setups on Alts… continuing to play it tight.

Google Cloud partners with huge crypto firms

Recently Google Cloud has partnered with BNB Chain, Sky Mavis (Axie Infinity), Coinbase, Nansen, and NEAR. Google had previously shown some hostility towards crypto by banning crypto-related google ads - but it seems the tech super giant is changing its stance towards the crypto and blockchain industry. The partnership with Coinbase last week exemplifies this. The Google and Coinbase partnership will see Coinbase use Google Cloud to process blockchain data at scale, leverage Google's fibre-optic network and even use its data analytics services for customer insights. Google Cloud will even allow some customers to pay for its cloud services with some select cryptocurrencies. Similar arrangements had been made with the other highlighted crypto projects

Metamask to allow bank-to-crypto funding option for US users

Crypto wallet Metamask has enabled instant bank funding for U.S. customers looking to purchase crypto directly. Previously Metamask hasn’t been the most user-friendly wallet option, with many retail users choosing to hold their cryptocurrencies on exchanges or semi-centralised wallets. Metamask is an essential piece of infrastructure as the most popular crypto wallet, and core to web3 interaction across the space. Making it easier for customers to purchase crypto assets directly with fiat currency, could drastically improve the user experience for new entrants looking to delve into the world of web3 and self-custody. Metamask has integrated with ACH settlement merchant Sardine to achieve this.

Mango Markets hacked for over $100+ Million

Another week, another $100+ million hack. Mango Markets, a decentralised finance trading platform built on Solana was hacked for around $112million in digital assets. The hackers used a technique known as oracle price manipulation to exploit and drain the capital from the protocol.

In an interesting turn of events, the hacker since made a proposal on the Mango DAO stating “By voting for this proposal, mango token holders agree to pay this bounty and pay off the bad debt with the treasury, and waive any potential claims against accounts with bad debt, and will not pursue any criminal investigations or freezing of funds once the tokens are sent back as described above”. The hacker had voted yes to their proposal with the stolen Mango tokens from the hack to push the proposal through. The hacker has since returned $69million to the Mango DAO but seems they will keep $47million as a reward for the exploit. Absolutely insane.

Blockchain Games and Metaverse projects raise 7bn so far in Q3

Bear market? What bear market? In a report between DappRadar and BGA, it was reported that $1.3Billion was raised by blockchain games and Metaverse projects despite the harsh market conditions, bringing the total for 2022 to over $7 Billion so far. It was also reported that “gaming activity accounted for almost half of all blockchain activity tracked by DappRadar across 50 networks, with 912,000 daily Unique Active Wallets (UAW) interacting with games’ smart contracts in September”. Blockchain games remain strong in the face of macro and crypto bearish conditions, with the capital raised this year almost doubling last year's total.

Common mistakes 

Have you ever wondered why there are so few that become successful? The key to their success is hidden in their mistakes.

Making mistakes is ordinary and sometimes even necessary to get some lessons out of it. The crucial point is to analyse them and avoid repeating them. Traders have masters of avoiding mistakes, but most importantly masters in the art of losing. Successful traders usually are not those who never lose, or are always right, but instead, those who lose a lot, but know how to lose, and those who make many mistakes but learn and avoid them later. They are professional losers.

Here are some mistakes to avoid that could cost you a fortune, let’s see if avoiding the pain will make you learn the lesson.

Being unprepared

Little to no preparation is the highest cause of failing at anything in life. Make sure you have a plan and you have got the basics before getting into something. When in trading, the more you learn, the better prepared you will be to assess the markets, react and once again minimise losses. Beginners might think that theory is not a big deal, and they will be able to build it up without effort, but the market is likely to teach them, the hard way. Chart patterns and Market structure is one good starting point.

Not having a plan

One of the biggest and most common mistakes is entering positions without defining a setup with proper exits. Intuitive and unsystematic trading is likely to not end in your favour, even if you get a winning streak, that would be based on luck, not skills.

Trading without a plan can be considered gambling, when the luck is not in your favour then emotions are likely to lead to hasty market decisions resulting in trading mistakes, and uncontrolled losses.

Lacking risk management

Risk management should be the core of your trading because it helps cut down losses and preserve your capital. That’s what should make you a professional loser. Risk management is the parachute in a skydiving jump, it’s what will keep you alive to jump another day.There are different techniques to manage your risk, make sure to implement the one that fits you best.

Neglecting macro and bias

Nowadays especially, it is important to be aware of relevant market news as economic events influence the direction of trading. So, if you are not aware of that information or the moment of the events, you might suffer or miss from volatility and trend changes associated.Those events should help you form a predominant bias and plan around it.

Trend awareness

This mistake is one of the easiest to avoid, and yet one of the most common even in veteran traders. It’s important to be aware of the predominant trend, but very often zooming out and looking at high time frame trends is forgotten.Risk usually should be different when the trade goes with or against the predominant trend.

Not journaling

This one was covered more in-depth in a previous article.

In a nutshell, the only way to know the measures you took to avoid a past mistake is to journal your market interactions. In the same way that for identifying new or persistent mistakes, the journal is the right tool, use it.

Getting emotional

Market true weapons to lure you into his deed are your emotions, fear and greed especially. There is even a Fear and Greed index to measure market sentiment. One of the hardest things to master is psychology and the right mindset where emotions are set aside and trading is a semi-robotic practice. Truth is that is near impossible given human nature. But controlling it will help avoid oversizing, revenge trading, missing out and a long list of bad practices.

Fun-trading

Having some fun while trading is great, but remember it is a business where the ultimate goal is making money. Is important not to lose the north on that as doing so could end up in making mistakes “just for fun”, most likely to be regretted later. Take trading seriously, set your goals and have the discipline to reach them.

I hope being aware of these common mistakes can save you some trouble, and more importantly some money!