Market Bounces Back and China Returns

Dear Traders,

Happy Fed meeting and interest rate hike day! The market has moved quite high as I am writing this newsletter, and many of us executed some very nice trades on BABA. You can watch the recap that Brian and I posted here.

You may be wondering this morning: Why are Chinese stocks ripping after their meltdown? The Chinese government vowed to implement policies to support their financial markets and boost economic growth in order to quell a rout that erased $1.5 trillion in value over two sessions. Their aims are to keep the Chinese stock market stable, support overseas share listings, and end as soon as possible their efforts to “rectify” internet platform companies.

Today, at 2pm ET, the Federal Reserve will announce their decision with regard to increasing interest rates for the first time since 2018. They’re set to do battle with the fastest climbing inflation in four decades. The Fed may also have something to say about how it plans to trim its balance sheet, which at $8.9 trillion is just humongous. The expectation is that they will hike rates by 25 basis points. A few weeks ago, there was a lot of talk about starting with a 50bps move, but the invasion of Ukraine and the volatility in the market means more caution is in order. To buttress this argument, JPow and his team have demonstrated in the past that they do not like to surprise the market.

As for the war in Eastern Europe, it appears that good news may be on the horizon. President Zelenskyy has indicated that Russia’s “positions in the negotiations sound more realistic” ahead of today’s talks. In addition, President Biden is scheduled to travel to Brussels next week to meet with NATO allies and take part in a summit of European Union leaders.

Last night, Thor presented an amazing webinar on understanding Level 2 and auction theory. If you were not able to attend it live, please take the time to watch the recording in our Education Center.

Tonight, for Wednesday Psychology, Mike will speak about a very important element of trading consistency: the concept of probabilities. Mike will share how you as a trader can develop an edge in the market similar to the house edge that makes casinos profitable. He will discuss the differences between trading and gambling as well as how precisely you can go about determining what your own specific TradeBook edge is. Mike’s presentation is titled:

Probabilities – Part 2: How to Employ Your TradeBook Edge Just Like a Casino Does
Wednesday, 8pm ET, Webinar Room (Elite members only)

Speaking of Mike, Norm and Mike are here in Vancouver. We enjoyed a “Cuban cigar dinner” together last night. If you don’t already, please follow each of us on Twitter: here and here and here.

See you tonight in the webinar and, if not, in the chatroom tomorrow morning.

To your success,

PS: I encourage you to practice your trading in our free web-based market replay tool. It is conveniently available 24/7, when you are, and we have recently upgraded it to better meet your needs. You can check it out here.