Hypothetical Trading System Signals on September 28, 2022 - Bank of England Bear Market Rally


Yesterday we said we anticipated a gap down today and also discussed the potential of a bear market rally. The market was moving in the direction of a gap down overnight since it had been propped up during the day. The Bank of England came in to add liquidity to the bond market before the US session. This generated a big bear market rally that our trading systems "called" with big hypothetical profits.


The 200K Portfolio was up $6.9K and the 50K Portfolio was up $1.725K - based on hypotheticals. The market has been so choppy on down days, the only tradeable market environment has been when the bulls get their way in an uptrend. It continues to be an unusual phenomena in this bear market that there are very few uncontested down days from day session open to day session close. On down days, the markets are typically propped up after noon and generate massive chop as the dip buyers continue to step in.


We are moving to a seasonal time period where the market is typically bullish. Since the Bank of England stepped in yesterday, we could start to see more central bank intervention to give an artificial edge to the bulls. It is also possible the market could come to realize that the only reason markets have gone up in recent years is because of central banks and financial engineering and the fundamental reality of the markets on their own is very bearish.


It is my goal to test my current portfolio with long only signals. It will take some time to adjust the strategies and combine the data. My biggest fear is taking a long only trade to the market and then encountering the bear market that we typically see where long trades mostly lose and the shorts that we turned off become highly profitable.

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