Live Trading System Signals on 01/27/2025

Deepseek was the disrupter that caused NVDA and the Nasdaq to drop today. There was a smooth overnight selloff with the Nasdaq futures down over 1000 points at its lowest point at 4:55 am, followed by a smooth V-Reversal. When the day session started, the noise began. In the last hour the Nasdaq rallied to make so that it closed just above the December 31 close.

The Nasdaq strategies were profitable today but the S&P strategies were down about -0.87% in the One Million MNS 87 with Adaptive MA taking the biggest loss and getting chopped up. Adaptive MA normally goes through a losing streak like this before it captures some larger and more trendy moves. This toneless market has lasted much longer than we typically see and we have seen very few intraday trends since mid-October. The metals and Bitcoin strategies also struggled in the back and forth price action.

V-Reversal took two long trades today with the first hitting a profit target and the second was 15 points away from a profit target, only to see the market reverse at 2:30 pm EST and run all the way to its stop loss before recovering again to where the profit target was. V-Reversal NQ was still up on the day but the last two hours of the day session were challenging with a parabolic move higher between 2-2:30 EST in the stock indexes, followed by a rapid 20 minute sell off starting a 2:30 pm EST to the lows of the day before a rally that made sure the Nasdaq closed above December's close. The VSD NQ captured the early short to make sure we had Nasdaq profits on the day in spite of the nefarious intra-day price movements.

We continue to trade for more stable price action and the Fed Meeting on Wednesday may provide the catalyst for a more "tradeable" market environment instead of the mostly sloppy, toneless intra-day price action that we have endured since mid-October.

The One Million MNS 87 + 2 NQ ON + 3 MBT was down -1.05% on the day while the 250K Portfolio was down -$2,100. This portfolio setup made equity peaks on January 6th with only 3 of 15 winning days since then. Its possible the "FOMC wait" has generated the toneless intra-day market.

The Stock Index Portfolio 24 hypothetical results were -$7,637.50 per E-mini and 1/10th of that per Micro. This portfolio setup made equity peaks on January 3 with only 4 of 16 winning days since, making a new worse case drawdown today. The V-Reversal and Gap Continuation 2020 are the highlights of this portfolio that could be traded in a Two System Portfolio (listed in the portfolio calculator). Trading smaller for a recovery and then scaling back in is one approach during this challenging window and potentially post FOMC.

The Top 50 Select Portfolio hypothetical results were +$80 on the day.

The 50K Portfolio hypothetical results were +$930 on the day.

In 2024 we saw more mean reversion in Fed Day trading patterns. We typically see noisy price action on Fed Days while more favorable price action occurs on non-Fed days. In 2024, we saw some of the trendiest days on FOMC Day while seeing more "Fed Day" price action on regular days. In recent years, we see that trading FOMC Day provides a better risk adjusted returns in our back test for the One Million MNS. We will re-assess the risk again tomorrow and may trade on FOMC this Wednesday to capture the "surprise" trends that we see during time periods when the market is typically less tradeable but has been more tradeable in the past 12 months. You have to question the reason for this change in price behavior. One possible scenario is the 0 DTE options being sold by institutions causing price action to remain contained. On FOMC Days there is less option activity which allows for the trends to take place. There are periods of times when some patterns seem reasonable and work while at some point in the future the exact opposite of a pattern that was working, is what now works and seems reasonable.