Avoiding Whiplash From ‘Paddle Ball’ Market

2021-05-18

The market session today felt like one of those ball-and-paddle games where you smack the rubber ball with the paddle and it whips back at you because it’s attached to a long rubber band.

Indexes, sectors, stocks, prices, and traders are getting whiplashed and smacked around repeatedly by a market that doesn’t seem to know if it’s going to rally or puke.

When the market is bouncing around like a paddle ball game, where are the opportunities?

Digesting all the factors related to this hectic pullback-then-rally environment, i.e. inflation fears, gas shortages, cyber attacks, etc., require considering which assets may have taken a hit, yet might benefit from this scenario in the long run.

Areas to consider might include clothing, retail, automobile manufacturers, homebuilding, cybersecurity, metals, meats, oil, or grains.

Panic fuels selling, especially during “sell in May and go away” seasonal action. This time frame might present an opportunity for traders to identify and engage in assets with long-term potential when the market moves away from the pullback.

This may require expanding your trading plan, so diligent research and consideration of risk potential are important.

When the market is smacking away at traders and everything seems to be bouncing out of control, learn to discover new opportunities and let the market lead the way toward profitability.

We like to plan for a trading environment with much less potential for whiplash.

We Saw: Market bleeding across all major indexes — 

We’re Watching: From the sidelines for limited opportunities —

  • Shorting this bouncy-house market takes mettle
  • How well Big Tech rides out this market
  • Where have all the honey badgers gone?