Navigating Market Trends: Harnessing Data Analysis, Hotspot Strategies and Technical Indicators to Optimize Profitability.

Hello, everyone!  

I’m delighted to meet all of you here at Diamond Ridge Financial Academy to learn cutting-edge investment strategies together.  

Let’s explore the power of quantitative trading and start a journey toward easy and profitable investing!

Yesterday, we learned about trading strategies for data-driven markets and the basic patterns of price fluctuations. From analyzing data before its release to executing trades after the announcement, we covered a complete process that can help us generate profits easily.

After the recent lessons, some of you had questions about trading data-driven markets, such as how to analyze data and price trends in advance, how to precisely seize trading opportunities during data events and how to leverage price fluctuations between assets for arbitrage.

To address everyone’s questions, we’ll take two steps:  

First, in next month’s class, our Chief Analyst Hanover, will provide an in-depth explanation of "Asset Arbitrage Theory," helping you achieve stable arbitrage profits. Second, we encourage you to actively participate in upcoming lessons and live trading sessions. By following just two live trades, you’ll grasp the core principles of investing. For next week’s Fed rate decision, we suggest preparing by setting up trading accounts and getting familiar with trade instructions.For detailed guidance, feel free to reach out to the assistants at Diamond Ridge Financial Academy.

Tonight, we’ll continue with our lesson on using the 21-day moving average to judge price trends and analyzing how candlestick patterns shape or influence price movements.  

Before we begin, let’s take a moment to review the current market situation.

The FTSE 100 index today entered a range-bound movement as expected in the early session. Industry indices rotated and even within some sectors, individual stocks experienced rotation.

For sectors, the aerospace sector which rebounded sharply yesterday, moved into a correction phase today. For individual stocks, energy companies like BP and Shell which dipped yesterday, posted slight gains today. British American Tobacco (BATS) which rose yesterday due to positive earnings, saw a drop today.

This shows the UK stock market overall has entered a weak phase. Except for some tech stocks, most traditional sectors are unlikely to form an upward trend. Going forward, we need to adjust our stock strategies, focusing on low-priced, high-potential tech stocks.

Data Insights today shows that, according to the latest report from the Royal Institution of Chartered Surveyors (RICS), UK house prices rose for the fourth consecutive month in Nov. About 25% of respondents reported price increases, up from 16% in Oct. The proportion of new buyer inquiries stayed at 12% but the net balance of agreed sales volumes dropped from 8% to 1%. RICS also noted that expectations for future sales growth slowed. Another survey highlighted that rising mortgage rates and macroeconomic uncertainty may hinder the recovery of the UK housing market.

For real estate investment, for those familiar with the UK real estate market, especially those living in London, it’s clear that post-pandemic government policies like lower down payments and interest rates boosted housing prices. The "international student economy" also played a role in pushing prices higher. However, this trend changed with this year’s autumn budget. The government announced a gradual increase in stamp duty. Starting from 31st of Oct 2024, stamp duty for buying second or additional properties will rise from 3% to 5%, meaning buyers will need to pay an extra 2% of the total property value in taxes.

Additionally, the temporary stamp duty relief introduced during the pandemic to stimulate the real estate market will end in Apr 2025. At that point, rates will return to pre-pandemic levels.

These changes have led to a rush of transactions to avoid higher taxes, temporarily driving up prices and volumes. However, recent data shows a decline in inquiries and transactions after a month of fast trading, signaling the end of the housing boom. Overbuilding has also created a supply surplus. With stamp duty set to rise further next year, we anticipate a sharp drop in transaction volumes and property prices.

Therefore, it is recommended to take advantage of current high property prices and consider selling real estate assets. Redirecting investments into tech assets could provide better growth opportunities.

In the European Markets, as expected today, the European Central Bank (ECB) announced a 25-basis-point cut in its three key rates: the deposit facility rate dropped to 3.0%, the main refinancing rate to 3.15% and the marginal lending rate to 3.40%. This marks the ECB's fourth rate cut since starting its easing cycle this year, bringing the benchmark rates to their lowest levels since Mar 2023, in line with market expectations. Comparatively, the UK's benchmark rate stands at 4.75%, 1.75% higher than the ECB's rate. This interest rate gap presents minor arbitrage opportunities between GBP and EUR, benefiting trade companies heavily reliant on imports from the European market.

In the US Markets, on Wall Street markets opened mixed due to conflicting economic data signals. The Producer Price Index (PPI) rose 0.4% month over month, exceeding expectations, while weekly jobless claims were also higher than anticipated. Despite Consumer Price Index (CPI) data meeting forecasts and bolstering confidence in the Fed's rate cut next week, stocks remained volatile amid a tug-of-war between bulls and bears.

The S&P 500 and Nasdaq briefly rebounded after the opening as rate-cut expectations lifted market sentiment. However, stronger than expected PPI data and weak employment metrics raised concerns about a slowing US economy, which has dampened the stock market's upward momentum. Given these mixed factors, the US stock market may enter a short-term consolidation phase. We need to closely monitor the Federal Reserve's policy moves next week.

Looking at specific investment strategies,it’s very wise to firmly embrace assets linked to the tech revolution. While NVIDIA saw a correction today, it didn’t really affect stocks in downstream industries of the digital economy and AI. For example, quantum tech stocks like IONQ and QUBT, which we’ve mentioned before, surged during today’s session. Similarly, in the digital asset sector, companies like Semler Scientific (SMLR) and TeraWulf (WULF) also performed well.

Notably, Tesla (TSLA) with substantial BTC holdings, helped us secure over 10% profits amid the Trump-driven economic boost. TeraWulf (WULF), often used for short-term trades, delivered a 15% profit on the latest purchase made on Dec 10. These examples highlight the immense investment opportunities brought about by the tech revolution.

Of course, from a technical analysis perspective, these stocks follow specific patterns when they rise. Take Trump Media & Technology Group (DJT) as an example. This stock aligns with both the AI industry’s growth and the digital economy’s needs. More importantly, like Tesla, it has benefited from the market buzz around Trump’s economic policies. Before Trump took office, we picked this stock as a mid to long-term investment target. Based on this, we then use technical patterns to find matching entry points for easy profits.  

For instance, our first buy-in was around $30.5 on Nov 29, as shown in Chart 3. After buying, the stock price surged for five straight days, hitting the first target of $36.5. After a few days of consolidation, it’s now starting its second upward trend.

Actually, using the 21-day moving average (MA) to analyze Trump Tech (DJT) makes it much simpler.  

First, in early Oct, the stock saw two waves of rallies before pulling back to the area near Point 1 on the chart. As you can see from the chart, Points 1 and 2 are on the same support line and both show green candlesticks engulfing red ones, signaling two clear bottoming patterns. The stock then entered a sideways phase.  

Next, after a period of consolidation, another green candlestick engulfed a red one and broke above the 21-day MA (Point 3), creating a precise buy signal.  

Recently, after a short period of adjustment, the 21-day MA started turning upward. Yesterday, we again saw a green candlestick engulfing a red one, suggesting the stock is about to begin a new upward trend. This is one of the reasons we recommended buying it again in the past two days. The great returns on these stocks all come from our accurate trend analysis.

In real-world investing, besides following price trends, we should closely monitor market hotspots and trends.

Take the “Trump Economic Effect” as an example. Since Trump is set to take office as US President on the 20th of next month, investment themes related to him have become market hotspots. Investments aligned with this trend often bring reliable returns. For instance, recent trades in Tesla (TSLA) and Trump Tech (DJT) have delivered significant profits due to expectations around Trump’s policies. Additionally, Trump’s support yesterday for the decentralized finance (DeFi) platform World Liberty Financial (WFLI) caused the prices of tokens like Eth, Chainlink (LINK) and Aave (AAVE) to rise sharply.

As shown in the picture above, through technical analysis, you'll notice that Aave (AAVE) also matches the pattern of a green candlestick engulfing a red candlestick and breaking through the 21-day moving average. On one hand, the technical trend is upward and on the other hand, the hot topic driven by Trump’s buying has led to a sharp rise in the coin's price in the short term.  

In fact, the rise in crypto is not just a result of short-term policy impact, but also reflects the market's optimism about the long-term development of the digital economy.

For example, the prospects for the quantitative trading token AQS are also worth looking forward to. First, the 5.0 version of the quantitative trading system will enter internal testing next month, and its innovative features may attract more investor attention. Second, after Trump takes office, his support for the DeFi field may further unlock the potential of crypto.  

In this context, investors can either take part in the academy’s learning activities to get BTC, ETH and AQS tokens for free, or position themselves early in popular coins, waiting for the market peak after Trump takes office to make a profit. This approach, combining hotspots with technical analysis, not only helps us seize opportunities better but also maximizes profits.

That’s all for tonight’s share. I hope the above content helps everyone better understand the principles of price trends. In the next class, we will continue explaining trend breakouts in price patterns to help you capture larger profit opportunities. Students who want to participate in a portfolio of tech stocks, crypto, etc., please get your trading accounts ready and seize the huge investment opportunities brought by the current global economic transformation. If you have any questions about specific trades like stocks, crypto, forex, etc., feel free to consult me.

Through tonight’s share, please think about:  

1. Analyzing the principles of price trend formation and investment rules.  

2. What are the characteristics of hot trends? Why is the tech industry worth continuous attention?