An interview with David Dube from Polaris Trading.
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Don’t Forget: The Long-term performance of the S&P 500, some longer-term setups, and 5 red flags that showed up before the 2022 bear market.
Our View
Today’s Opening Print is going to feature an interview with David Dube, who runs Polaris Trading — one of the platforms on Mr Top Step. His landing page on the MTS site can be found right here.
David posts his trades live in his own chat within the MTS chat software. I have known David Dube for over 10 years.
David Dube with Polaris Trading
David, before you started your firm and your CTA you worked on Wall Street for a number of years. Can you give me a history of your experience and explain how that helped guide you and shaped how you trade today?
Danny, in total I have worked 38 years in the business.
First, my trading career began in 1984, just at the start of the Great Bull Market as an order-entry clerk (upstairs) sending commodity trades to the various Chicago Exchanges, but quickly shifted gears to NASDAQ Market-Making at Troster Singer/Spear-Leeds-Kellogg (SLK), then to Shearson Lehman Hutton, then Cowen & Co. as Bio-Tech Market-Maker; finally UBS Securities as Head Trader Healthcare/BioTech which ended in 2004.
Following a short hiatus, I began trading Futures (ES, NQ) for a private High–Frequency Hedge Fund through the Financial Crisis. Since then, I have formed an Educational Trading Business (Polaris Trading Group) for Retail Traders, as well as a Commodity Trading Advisory (CTA) for high-net-worth individuals.
Second, I am fortunate to have had some fantastic mentors along my career path that guided me and shaped how I trade today, always stressing proper position sizing and risk management. Those two primary ingredients have allowed me to survive and thrive throughout the various market cycles.
Today, I try to pass along my knowledge to those seeking trading guidance to help navigate today’s market volatility. I strongly believe everyone should have a mentor or a community such as PTG, MTS (or otherwise) with traders helping traders. No one should trade these markets in isolation.
One of the things I have admired about you is your discipline. You show up every day and put effort into your own trading right along with your subscribers. Where does that discipline come from?
I learned early on that to have any chance of success trading, you MUST put in the time and effort, gaining knowledge and experience. Simply put, there are no “shortcuts.” Make no mistake, there have been multiple times over my career that I considered “packing it in,” but I worked through the hard times. To quote the Navy Seals: “The Only Easy Day Was Yesterday!” I get a lot of my inspiration from the hard work and dedication of the Seal’s ethic.
Discipline trading the market does not come easy…I work daily on following my trading rules and keeping my mindset focused on the end goal. My passion and drive to become the very-best trader I can be forces me to be disciplined. I believe discipline is learned and earned every day.
You are one of the most open and honest traders I have come across in the business. I see that you now are freely broadcasting a trading system based on your strategies along with a journal of outcomes.
What is this and who is it for?
As you know, the trading education landscape is littered with “charlatans.” When I first moved from Market-Making at Investment Banks to this side of the business, (independent trader) what I saw was simply shocking. The B.S. that was being taught and passed on as successful trading without actual performance metrics was astounding.
Polaris Trading Group’s (PTG) core philosophy is to provide mainly Retail Traders an educational platform of Truthfulness, Transparency, and Profitability. PTG’s Trading Room (which is part of the larger Mr.Top Step Community), offers its private traders access to our methodology and strategies transparently, showing wins and losses respectively.
We have recently expanded our reach to YouTube Live Streaming, providing the general public an “inside-view” of one specific trading strategy in a “Trader Funding” format, which has become popular, from the evaluation stage to the funded trader stage. This is a fully truthful and transparent environment, something that is severely lacking within the Futures Trading World.
David, during your time on Wall Street you were part of a lot of big stock market declines, how do you compare today with the past?
During my 38-year career, I have experienced all the major market events…from Black Monday (1987), the Gulf Persian War/1990’s Recession, the Bear Market (2007-09), the Financial Crisis of 2007-08, Flash Crash (2010), Pandemic 2020…the list goes on.
Each major event had its unique challenges trading the markets…Of course, volatility was always present during each, and as Market-Maker I quickly learned to adjust my trading to align with the current environment. A majority of my trading was conducted more manually in those days and the price swings, though dramatic at the time, typically took longer to unfold, since humans were trading.
Today’s “modern trading” is a totally different animal, silicon-based (ALGO’s) trading as well as short-dated Options Contracts has produced what I refer to as “super-charged” day traders, slinging around hundreds of millions of dollars each day.
Volatility is no surprise in the markets…What makes today’s market action different in my opinion is the “speed-of-light” multiple swings intra-day, producing huge ranges…For example, the current Average Daily Range (ADR) in the ES is in excess of 110 handles. PTG has developed its own proprietary Auto-Execution Algorithms trading our various strategies to be able to compete on a more equal playing field with the “BIG Money.”
Given my extensive experience over a wide array of market environments, PTG’s success is attributed to its discipline and ability to adjust and align its traders with the current market dynamics.
Our Lean
After David’s excellent interview, I don’t want to use up too much space.
The low-breadth rally in the S&P combined with overnight weakness in the DAX may have the S&P tapping the brakes a bit this morning.
For now, 3820 is resistance. If we break above this level and hold, 3850+ could be in play today. On the downside, I want to see support at 3775-ish. Below that could open the door to the 3730s.
Technical Edge
- NYSE Breadth: 52% Upside Volume
- Advance/Decline: 56% Advance
- VIX: ~$39.80
Despite an early fade on Monday morning, the markets found their footing as the bulls seem intent on taking back some momentum. It looked like they were going to fumble the ball last Friday, but since then, bulls have done a good job at keeping the market from unraveling.
However, have a glance at the stats just above (breadth and the Advance/Decliners). They don’t tell the whole story, but Monday’s action was a low-breadth rally. That was alongside a dip in bonds and a small rally in the dollar, although the reverse is true so far today (bonds up, dollar flat/down).
S&P 500 — ES
In the chart above, you can see how the ES is trading into a key spot right now. On the daily setup, it’s ramming right into the ~3800 area, which was resistance earlier this month. On the weekly chart, we’re trading into the 10-week moving average.
~3820 is becoming very key. If the ES can clear this level and stay above it, the 50-day moving average and 3900 area could be on tap.
If it can’t, I want to see support near 3735, the 3730s, then in the 3670s. Below 3639 is a big problem.
The Trade: If the ES undercuts Monday’s low at 3736.50 and can reclaim it, I’m interested in a long trade. Not just because bulls have had the momentum, but because that will likely correlate with a test of the 10-day moving average.
S&P 500 — SPY
It’s no surprise that SPY has a very similar setup. On the upside, it has to clear $379.50.
Above $380 can open the door to $390, but it’s important for it to sustain above $380.
On the downside, a break of and failure to reclaim yesterday’s low at $373.11 could open the door down to $370 and the 10-day moving average. $364 to $365 remains support until proven otherwise.
QQQ
QQQ is in a weekly-up rotation as long as it’s over $277.21.
On the upside, let’s see if it can push up toward $281.50 — the 10-week moving average. I expect potential resistance at $284. Above it opens the door up to $290.
Look at where support came into play. How nice was that?
GIS
Look at how tight General Mills has gotten on the weekly chart (on the right).
Weekly up over ~$79 has me interested in a long position, with a stop below last week’s low — call it $76.
Go-To Watchlist
*Feel free to build your own trades off these relative strength leaders*
- Numbered are the ones I’m watching most closely.
- Bold are the trades with recent updates.
- Italics show means the trade is closed.
Open Positions
- XLE — Trimmed into strength on Friday and now down to ⅓ position here (or lower). On the downside, use a B/E stop.
- You can either be out completely at $87.50 to $88 or leave a runner for $90+
Relative strength leaders →
Top (absolutely gorgeous moves lately):
- LNG
- MCK
- CAH
- CI
- CCRN
- GIS
- LPLA
- REGN
- ALB
- VRTX
- UNH
Economic Calendar
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