Avoid Market Risk, Sit On Your Hands

2020-03-23 | Simpler Trading Team

Monday early plan for coronavirus trading — sit on hands and do not touch your computer.

It protects capital, and the trader.

Monday plan for late trading and overnight — maintain sit on hands plan or accept risk of historical market volatility.

There is no firm indication of a true bottom, and Simpler Trading moderators in the live-trade sessions believe the economy and markets could get worse.

Markets opened on Monday and spiraled down once again. The Dow broke below negative 900 points and closed the cash session almost 600 points down.

The Fed fired everything it had at this raging bear market with no reasonable effect.

The shock of this market is the speed at which everything has unravelled. Just a few weeks ago the U.S. indexes hit historical all-time highs in the best stock market on the planet.

Simpler’s traders anticipate the economic ripple of this sudden stoppage in business and market losses to continue for weeks or months.

How low can the market go?

Analysts are showing this month’s Dow collapse could eclipse the 30.7% drop in September 1931. It hasn’t dropped that badly in a calendar month since.

By comparison, key statistics from the 2008 financial crisis show that tech stocks dropped 60% and service stocks 80% before bottoming. There’s no certainty that the market or specific sectors will fall that low or that they will hold up in this volatile environment.

A shift of positive news related to the coronavirus might help, but nothing is for sure.

The market, and certain tickers, have presented bear market setups, but traders must be willing to take on the risk.

We Saw: continued down pressure with a sharp drop in the markets — 

  • The president rolling out the National Guard to help across the country
  • Feds attempting everything to boost the markets
  • Markets still not responding positively to Fed intervention

We’re Watching: … for how low this market will sink —

  • Effects of bailouts, stimulus plans, and coronavirus
  • What tickers can thrive in “shut down” economy?
  • Is there profit in beer and pizza producers?

Want to train during live trading hours? — check out the Simpler Trading mastery training HERE.