- Indices: Sideways in a Bull Quiet regime, Last week was a failed breakout after S&P hit new all time highs. Expecting further sideways action into April.
- Metals: Gold in Bull Quiet, silver, copper and platinum in neutral.
- Energy: Neutral action except for Natural Gas which is in the Bull Quiet regime and moving higher.
- Currencies: Bear Quiet after Bear Volatile regimes signal trending higher.
- Bonds: Bear Quiet turned to Bear Volatile regimes and trending higher.
- Ags and Softs: Corn, wheat, and soybeans have been attempting to break out higher. Coffee put in Bull Volatile reversal and continues lower. Cotton trending down on low volatility. Sugar is strong, and only in the Neutral regime.
- Crypto: Long Bitcoin, flat on all altcoins.
How Trend Following and Momentum Trading Can Give You an Edge
The market is a battlefield, and the traders who survive—let alone thrive—aren’t the ones trying to outthink or outguess it. They’re the ones who align themselves with the dominant trend, riding waves of momentum rather than trying to predict reversals.
Trend following and momentum trading aren’t just strategies; they are survival mechanisms in an environment where the only constant is change.
So today, we’re going deep. We’ll start with the top-down approach to trend trading, then I’ll walk you through how I use my Momentum System to execute in this environment.
Let’s get to it.
The Top-Down Approach to Trend Following & Momentum Trading
A good trader doesn’t just throw darts at the board, hoping for a bullseye. Instead, they start at the highest level—the macro environment—and work their way down. This ensures that they’re playing the right game at the right time.
Identify the Market Regime
The first step in any trading strategy is understanding what type of market you’re dealing with.
The market isn’t always the same. It cycles between different regimes, each requiring a different trading approach. These regimes can be categorized by direction and volatility:
Bull Volatile – Explosive rallies, large swings both up and down. Often occurs near major market tops or bottoms.
Bull Quiet – Strong, smooth uptrends with minimal pullbacks. The easiest environment for trend followers.
Neutral – Choppy, sideways markets. Trend following strategies get whipsawed here.
Bear Quiet – Slow, grinding downtrend. Traps traders who expect a quick reversal.
Bear Volatile – High-speed sell-offs and panic selling. A trader’s biggest opportunity, but also the most dangerous environment.
So before taking a trade, the first question is: What regime are we in?
In equities, 80% of the time, the S&P 500 trades in a Blended Bull Market Regime. That means buying dips generally works better than shorting tops. But the key is identifying the transition points when the market is shifting from one regime to another.
If you misread the regime, you’ll end up using the wrong strategy. You don’t trade a momentum strategy in a choppy market, just like you don’t bring golf clubs to a tennis match.
Find the Right Sectors & Assets (“Table Selection”)
Once we know the market environment, the next step is choosing the right game to play.
This is a concept I borrowed from poker—Table Selection. If you sit at the wrong table, it doesn’t matter how good you are; you’ll still lose money.
Here’s what this looks like in trading:
Find the strongest stocks, sectors, or asset classes.
Identify what’s leading the market and trade in that direction.
Avoid dead money—don’t trade assets that aren’t moving.
For example, we can look at the full universe of futures contracts (that I trade) since the August 4th Yen Crash to find which ones have been the strongest, which are the weakest, and which are completely flat.
Coffee, Bitcoin and Corn have been the strongest, while currencies have been the weakest.
Momentum Confirmation – When To Enter & Exit
Once we’ve found a trending asset, we need a structured way to enter and exit trades.
This is where momentum confirmation comes in. Momentum strategies don’t just buy assets because they’ve gone up; they look for specific conditions that indicate strength is continuing.
That means checking:
Breakouts & Follow-Through – Has the asset recently made a new high with strong volume?
Trend Strength – Is it above key moving averages? Is momentum accelerating?
Breadth Confirmation – Are multiple stocks/commodities in the same sector confirming the move?
Without these factors, you risk chasing weak breakouts that fail.
How I Trade My Momentum System
Now that we’ve laid out the top-down process, let’s talk about how we execute these ideas in practice.
My Momentum System is a rules-based system designed to capture explosive moves in trending stocks, futures, or cryptocurrencies.
It works by:
- Tracking the strongest movers
- Providing clear entry & exit signals
- Keeping us out of weak setups
Let’s break it down.
Step 1: Finding High-Probability Setups
The first step is to identify the assets that big money is piling into. These are the names where the real money is flowing.
Example: We got long crypto alt coins ahead of the US Presidential election…before everyone else started chasing them after the election results.
And sold them after the momentum ended
Crypto is an excellent example, as the momentum is incredibly strong when it’s hot and incredibly weak when it’s cold.
Step 2: Executing with Precision
Once we find strong setups, the system looks for:
A clean technical entry – No weak breakouts, only strong setups.
It can be further improved by adding in confirmation such as:
- Momentum confirmation – The move must be supported by breadth and volume.
- A defined risk level – Every trade has a stop-loss before we enter.
By systematizing this process, we remove emotion from the trade. We’re not guessing, not hoping, not trying to outsmart the market—just executing what the system tells us.
Step 3: Ride Winners, Cut Losers Fast
Momentum trading is about staying in trades that are working and cutting the ones that aren’t.
The problem most traders have? They do the opposite. They cut their winners too soon and hold their losers, hoping they’ll turn around.
The Swing Beast System prevents that mistake by using predefined exits:
- If an asset continues trending higher, we stay in.
- If momentum dies, we get out.
It’s that simple.
Why This Approach Works Over Time
Most traders struggle because they fight the market instead of aligning with it.
Trend following works because trends persist longer than people expect. Momentum works because institutions pile into strength, creating a feedback loop. Having a structured system removes emotion and second-guessing.
The key to making money isn’t being right all the time—it’s being disciplined and staying with your edge.
That means:
- Following the system, even when it feels uncomfortable.
- Sticking with winners instead of overtrading.
- Sitting in cash when there’s no setup, instead of forcing trades.
When you trade with the right system in the right environment, you stop reacting to the market and start executing with confidence.
The market is full of noise. The easiest way to get lost is by trying to predict tops and bottoms instead of riding the trend that’s already there.
Momentum trading is about putting the odds in your favor—aligning yourself with strength and letting the market do the heavy lifting.
Now, on to this week’s Sunday Setup.
Regimes Dashboard
Of note, only one market is in an extreme Volatile regime: coffee. Compare that to the past month, when currencies, bonds, and softs were all in extreme volatile regimes. The markets have calmed down a bit, and volatility across assets has relaxed.
Positions
Long $ES – S&P500 – Trend
Long $GC – Gold – Trend
Long $ZC – Corn – Trend
Long $6E – Euro – Reversion
Long $GF – Feeder Cattle – Trend
Target Setups for Next Week
I am keeping an eye on the $ES long trade, as Friday’s selloff was strong immediately after $ES hit new all-time highs the day before. If ES can turn higher and close above all-time highs, I will be adding to my position. My rule is to look for the best-looking sell setups to fail and get long.
Sugar has been on a tear, after bottoming out in the Bear Quiet regime. Even though it’s blasted higher it still remains in the Neutral regime, indicating a lot more upside is possible. Or said differently, even with all that strength, Sugar isn’t even in a bullish regime yet.
Bitcoin, using the 2016-2018 analog, which I have been using quite effectively since the bull market began in 2023, is preparing for a run into April. Bitcoin is still the strongest performer overall, and I will remain there until the Crypto Momentum system takes over and starts rotating me through the different alt sectors.
For the past year or so, meme coins have caused a lot of chaos, and I’m seeing a lot of capitulation in the high-risk gambling side of crypto.
Notice how this always happens when Bitcoin is quiet. That quiet is about to end.
