Newsletter #27 Rally to Continue?
Subscribers to the newsletter have tripled this month. Thank you for your time and attention. I value it. I aspire to set the bar high in terms of transparency and hopefully in terms of performance too.
If you are a new reader, I urge you to go through the About page where I have outlined how the model works along with other FAQs. Also, go through all the previous posts (each is max 2-3 min read), this will help you build the necessary conviction in the future model signals.
Model had a really good week. In last week's post Relief rally or major reversal? when I wrote the below, the relief rally had not even begun yet.
There's a reason why it's called a relief rally. Coz any up-move that comes after so much pain does provide a great amount of relief to all bagholders.
Since then both crypto and stocks have gone on a tear.
Below is how All of the model's long positions have performed.
$ETH up 26%
$BTC up 9%
$ENS up 6%
$LDO up 7%
$TWT up 8%
$QNT up -2%
Model continues to be long on all of them.
Additionally Model went long on $CHZ $ATOM $SOL $MATIC $AERGO $PYR $LAZIO $PORTO $SANTOS
I get a lot of DMs from followers on a daily basis, asking if the model is still long on the published positions. I don't blame them, they are accustomed to being dumped on by their favorite Crypto influencer or their ultra-short-term view which changes every hour depending on the red/green candle.
So this is a good time to remind everyone that the model is based on the high time frames, and while it can be wrong at times, it won't flip-flop on signals on a daily basis. It's designed to ride big trends and tolerate huge volatility. The upside of that is the model can ride 50-100x as it did in Sol and Matic during the 2021 bull run (check performance here), but the downside to that is you give back some of the gains, coz by the time the trend breaks on high time frames the coins are usually down 20-30% from the highest highs. Let me explain using Matic as an example. Model went long Matic on Dec 20 and stayed long till May 21. From the time it went long, to the peak of the move, the model's position in Matic was up 15161% (it's not a typo) but by the time it exited it was down 30% from the highest high. Now 30% might not seem a lot but that's what makes 151x into 100x. Also during the entire up-move Matic had 7 30+% corrections on the way. It takes an emotional balance of a monk to ride such trends.
Now I am NOT suggesting every other Model long will perform like that, far from it, that was a dream trade during the crazy bull run but the main takeaway should be, that even in the best-performing trade such volatility and giveback is to be expected.
Models win rate is close to 70% which means it gets about 7 out of 10 right on average and the one it gets wrong will also have a stop loss of about 20-30%. Something to keep in mind when position-sizing the trade. And of course, none of what you read is here financial advice.
I cannot predict how good the future performances will be, but what I can assure is that for every long entry model takes, there will be regular updates till the trade is on and published when the model exits it. Even the failed ones. So there is closure.
Coming to Macro I wrote this last week
The model has turned from bullish to neutral on the US dollar (DXY) Volatility (VIX) and interest rates (US10Y). After correcting calling a sizable down move in Stocks, the model also has turned from bearish to neutral on S&500 & Nadaq100. If there's follow-through & confirmation then it would flip Bullish.
Model has flipped from Neutral to Bearish on $DXY and Bullish On S&P500 and Nasdaq100.
This week there is FOMC so one should expect some volatility around it but overall Model is bullish on Crypto and Stocks.
Below are the Models signals on BTC, ETH, and Solana from 2020 to date and all the coins the model is long on. I have been publishing this every week since I went public in May and will continue to do so.
** Web3Quant is not registered with any financial regulatory agencies. Web3Quant is purely a research publishing firm and does not provide any personalized financial advice. Do your own research and consult your financial advisor.**