Risk-on Sentiment Drives S&P500 to New Highs & Oil Pushes Higher

Power to the consistent performers in August, as they trade their way incrementally higher.

You’d be forgiven to think that this month’s leader packs, hovering around the 95-115% return, are below the normal.

But these returns have been achieved in less than 1-month.

What we find inspiring about these returns is the consistency of applying their trading strategies, to achieve these well above average returns. Please note that trading leveraged products involve risk and you can lose more than your starting capital.

Wei Wei Wang continues to dominate the top spot, sitting on 116% return as of the screen capture this morning.

And we have noticed a few new traders jumping into the top 10 spots, which is encouraging to see.

Here is the current leaderboard as it stands.


S&P500 rockets to new closing highs, again

Are economic conditions improving that much that we see record after record closing highs on the S&P500 index?

The current uptrend is staggering in its intensity and duration, with seemingly nothing able to stop this freight train.

It is the risk-on sentiment that is fuelling the move, with speculators willing to buy up the fastest-moving stocks, pushing all the major indices to record highs.

Holger Zschaepitz captures an interesting note below, highlighting that despite a sharp decline in consumer confidence, the S&P500 continues to close at record closing highs.


You can see on the chart below, how strong the move since mid-March lows has been.

As they say in every trading book, the trend is your friend until it bends at the end.

And there is no sign of a bend at the end, and may not be, as we head into the November elections.


Crude oil sees solid gains overnight

Traders around the world will be eyeing off the recent push higher in Crude Oil, as it sits ever so close to a break of the high back on the 5th of August.

Blue-sky territory is one of the most-watched levels for technical traders, who like to capitalise on markets breaking into new short-term highs.

Paul Wallace captures the reason why traders were bullish overnight, as Tropical Storm Laura rages havoc on the majority of the US Gulf’s output.


As you can see in the chart below, WTI Crude Oil is ever so close to a break of recent highs, which has the potential to trigger a swarm of potential buying activity.

It would be hard to imagine a high number of traders are currently short so that the thinking would be short covering might not fuel this potential move higher, but instead, production cuts will likely grab the headlines.


What do you do when markets are difficult?

With little movement on the leaderboard and no-one running away with the contest in August, you might be thinking that trading opportunities are trickier right now.

Firstly, trading is a challenging endeavour at any time, but when markets aren’t volatile, patience is key.

When your system continues to make small loss after small loss, followed by a few small wins, you must remain patient, knowing your system performs better in certain types of markets.

Unfortunately, there isn’t one style of trading that captures gain after gain, and if there was, it would be short-lived.

Instead, we need to apply our best strategies, tied in with excellent risk management, so we can live to trade another day.

While it may be frustrating to see your results, which could be in the negative this month, keep trading small relative to your account size, making sure each loss is insignificant to your overall account.

Your backtesting will hopefully have proved that your system can make steady gains when conditions are right.

Stay true to your cause, risk small amounts of money on each trade, and be patient, and let the trade wins flow, as Dr Alexander Elder like to say.

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Ashley Jessen // Author of CFDs Made Simple, Head of Marketing at ACY Securities

Ashley Jessen is the author of CFDs Made Simple and Head of Marketing at ACY Securities. He has been in the financial services industry since the year 2000 and worked for some of the leading companies in the CFD, Forex and Online Trading space.