Profit rewards the patient
If you are a member of TMC, you will have seen me, Jonny, going through burnout on camera from actively managing the volatility in my portfolio.
At the beginning of October, the market presented us with some fantastic opportunities. Many of these moves quickly pushed into profit before sharply reversing, resulting in breakeven or small losses.
As a trader, when markets are indecisive, it can be frustrating and draining. This month has served as a crucial reminder for all that markets will behave like this, and if you want to be in this game for the long term, you have to be able to deal with it, keep calm, and execute your plan without a fault.
I demonstrated this throughout the month of October as I stuck to my plan, was not scared to enter new positions, and did not mis-manage positions out of fear or greed.
Remaining patient, and sticking to my plan, resulted in one of my largest returning months in 2020. And this was all documented live during our Market Update livestream sessions for October.
Join me live this Monday, Nov 2, for another update!
Oil falling from the sky
Earlier in 2020, when we saw national lockdowns, this, quite obviously, had a significant effect on many different markets. One of the markets which saw one of the most shocking impacts was Oil. As demand was nonexistent with individuals not traveling to work in their cars/public transport, cruises and ship transporters stopped, airlines seeing much reduced total daily flight numbers.
This enormous oversupply led to Oil's negative rates in April 2020. One of the most significant issues with Oil is storage, and we ended up seeing manufacturers paying others to store their barrels. This was one of the many traditional commodities that showed it's inefficiencies during these new times.
As lockdown restrictions eased, we saw Oil regain some ground with a long steady pullback to the $46 region. The technicals on the higher time frames still point towards bearish, and after this pullback, we have been waiting for the daily to align with our bias and give us an indication we will see a fall from these levels of resistance.
The lower timeframes finally broke down, aligning with the bearish sentiment present on the daily, weekly, and monthly charts and gave us several opportunities to execute on and make significant profits.
Back in February 2020, during the third week, we saw the technicals beautifully align for the massive short that came after (this was all broken down by our founder Irek in TMC's Insights episode: Oil Opportunity & the Move to Renewable Energy).
In September 2020, we had a similar breakdown, lining up for the next big short, which we took advantage of. Check out TMC's Insights episode from Sep 11 by Irek: The Bears Aren't Ready for Hibernation, where this second opportunity was initially analyzed and broken down in full.
We expect this bearish momentum to continue. Fundamentals further back this up. The UK announced this weekend they are entering a 4-week lockdown, and we expect to see tightened rules globally as we move into November. We will likely see similar price action to the first lockdowns as supply will be much greater than demand.
We initially expect a fall to the $30 level, but it wouldn't surprise us if, at some point, the price revisited all-time lows.
November 2nd - Presidential elections. All eyes this week are on Tuesday and the impending elections in the USA. We expect to see large volatility across all assets and sectors. If you are in any positions, ensure you manage accordingly as we could be in for a bumpy start to the week.
Airline stocks in for some turbulence
We are in the midst of earnings season. We spoke on this in last week's newsletter and touched on some surprises we may see; Netflix's weak data was one of these.
Something that also surprised us was airplane manufacturer Boeing's better than expected earnings on Wednesday. They didn't lose as much money as experts predicted; however, when you start digging into the data, it is clear airline stocks are still in for some turbulence. Boeing received less than half the orders from customers, world's airlines, than they had in 2019, which paints a pretty gloomy picture for the future.
The technical picture for most airlines gave us an indication of bearish momentum ahead, and now the data is being released backing this technical picture up, we have seen LTF's breaking down. We are watching for retests of all the confluence areas to wait for the next leg of bearish momentum.
Throw in the tightening on travel, lockdowns pending, and there isn't much good news for airlines as we close out the first month of Q4. As for the foreseeable, they won’t be able to increase their profits, they will have to go to some extreme levels to cut costs to stay afloat.
JETs is an index made up of US and international passenger airlines, airports, and aircraft manufacturers worldwide. We have seen a clear breakdown on the daily chart and now are waiting for a lower high to form to play the next sell-off.
We recently revamped our community and have been extremely impressed with the value that some of our members have contributed, sharing their knowledge in different areas with all of us.
As our club is full of well-researched, intelligent individuals, we wanted to make some changes to ensure we have a platform where we can clearly and effectively collaborate, share our insights, opinions, and knowledge, so we all win.
Since we made these changes, we've seen some incredible insights shared and lots of posts full of value. Huge shout out to all of our awesome members for making the club as epic as it is. Check out some of the screenshots below!
Coming up this week
Monday, November 2, 2020 @ 1pm PT
Market Update - lead by Jonny Godfrey
Wednesday, November 4, 2020 @ 1pm PT
Market Update - lead by Jonny Godfrey
Friday, November 6, 2020 @ 1pm PT
Insights - lead by Irek Piekarski
All the best for the week ahead - see you in the club!
Jonny Godfrey & the TMC Team
PS. If you're a member of our Diamond tier, make sure to catch up on the (advanced) Monthly Coaching Call from Oct 30: Level Up Your Performance Review! This was a 2.5 hour session lead by Irek, and is the perfect primer as we approach the final stretch of 2020.