The MSTR chart is a perfect example of the importance of market timing.

The MSTR stock did nothing for almost two decades! Imagine investing in it early and waiting 20 years to get a return.

If you want to have conviction in your ideas, you need to know what moves your stocks and position for that change.

In the book “The New Market Wizards”, Stanley Druckenmiller said this in response to the question of how he evaluates stocks:

“When I first started out, I did very thorough papers covering every aspect of a stock or industry. Before I could make the presentation to the stock selection committee, I first had to submit the paper to the research director.“

„I particularly remember the time I gave him my paper on the banking industry. I felt very proud of my work. However, he read through it and said, This is useless. What makes the stock go up and down? That comment acted as a spur.“

„Thereafter, I focused my analysis on seeking to identify the factors that were strongly correlated to a stock’s price movement as opposed to looking at all the fundamentals. Frankly, even today, many analysts still don’t know what makes their particular stocks go up and down.”

His number one advice? Do not invest in the present. The present does not move stock prices. Change moves them.

MicroStrategy is basically a Bitcoin play, so you just need to know where Bitcoin is going to trade MSTR stock. No valuation analysis needed.

The catalyst for the latest rally? Trump’s victory.

This is why waiting for the right catalysts is paramount. Not only does it tell you WHEN to trade, but it also gives you an IMMEDIATE feedback on whether you are right or
wrong.

That helps with knowing when to bet more and when to get out to keep your drawdown low.

This article was written by Giuseppe Dellamotta at www.forexlive.com.

Fundamental
Overview

The puzzling weakness in
the US Dollar following Trump’s victory looks more and more like it was just a
“sell the fact” reaction. The greenback is now back in the driving seat, and we
might also be seeing some pre-positioning into a potentially hot US CPI report
tomorrow.

At the latest Fed’s
decision, Fed Chair Powell said that they expect bumps on inflation and that
one or two bad data months on inflation won’t change the process. This keeps
the 25 bps cut in December in place even if we get higher inflation readings.

The market though is
forward-looking, and the rise in Treasury yields showed that the market sees
risks to the inflation outlook. Moreover, the red sweep could increase those
fears if the progress on inflation stalls, or worse, reverses.

On the GBP side, this
morning we got the UK
labour market report and although the data was mostly mixed, it leant more
on the dovish side. Overall though, it didn’t change anything for the market or
the BoE.

GBPUSD
Technical Analysis – Daily Timeframe

On the daily chart, we can
see that GBPUSD broke through the support
zone around the 1.2840 level and extended the drop as more sellers piled in.
The natural target should be the swing low at 1.2665 level. That’s where we can
expect the buyers to step in with a defined risk below the level to position
for a rally back into the 1.28 handle.

GBPUSD Technical
Analysis – 4 hour Timeframe

On the 4 hour chart, we can
see more clearly the break of the support which was defining the range between
the 1.2840 support and the 1.3040 resistance. If the price retests the support
now turned resistance, we can expect the sellers to step in with a defined risk
above the level to position for a drop into the 1.2665 level next. The buyers,
on the other hand, will want to see the price breaking higher to position for a
rally back into the 1.3040 resistance.

GBPUSD Technical
Analysis – 1 hour Timeframe

On the 1 hour chart, we can
see that we have a minor downward trendline defining the current bearish
momentum. The sellers will likely keep on leaning on it to position for new
lows, while the buyers will look for a break higher to pile in for a rally into
new highs. The red lines define the average daily range for today.

Upcoming
Catalysts

This week is a bit empty on the data front with the most important releases
scheduled for the latter part of the week. Tomorrow, we have the US CPI report.
On Thursday, we get the latest US Jobless Claims figures. On Friday, we
conclude the week with the US Retail Sales data.

This article was written by Giuseppe Dellamotta at www.forexlive.com.

The NFIB Small Business Optimism Index rose by 2.2 points in October to
93.7. This is the 34th consecutive month below the 50-year average of
98. The Uncertainty Index rose seven points to 110, the highest reading
recorded. A seasonally adjusted net negative 20% of small business
owners reported higher nominal sales in the past three months, the
lowest reading since July 2020.

“With the election over, small business owners will begin to feel less uncertain about future business conditions,” said NFIB Chief Economist Bill Dunkelberg.
“Although optimism is on the rise on Main Street, small business owners
are still facing unprecedented economic adversity. Low sales, unfilled
jobs openings, and ongoing inflationary pressures continue to challenge
our Main Streets, but owners remain hopeful as they head toward the
holiday season.”

This article was written by Justin Low at www.forexlive.com.