Cash In Hand As Market Spirals Into Red?

2021-03-04

Trading risks accelerated as the market continued its downward spiral Thursday.

All three major indexes closed in the red, with the Nasdaq leading the losses at more than 2%. This downtrend is highlighting one trading position — cash.

Cash is nimble, less risky, and gives traders pause when contemplating jumping into a spiraling fray.

When in cash — and the market shifts into an uptrend — this position allows traders to jump in while maintaining a sensible risk profile. Traders “piddling around” and tying up accounts with risky positions in the current market volatility could miss a fast turn to the upside.

Simpler’s traders are watching how there are larger macro economic pressures hitting across the markets and how this influence tends to flatten everything in its path.

Even “big player” algorithms appear to have moved aside. “Algos” tend to provide liquidity on the way up, then step away on the way down.

The plan to close out this week is to “wait and see.” As Simpler’s traders repeat regularly, there is no reason to lose your arse on a Friday. This week’s close could get worse and then the expectation would be for an even worse Monday session.

Sitting flat and waiting for the fallout before a rally is the simpler play.

But as everyone knows, no one can predict the future so it’s a given that we’ll keep a close eye on our trading platforms through this turbulence.

We Saw: Yet another day of harsh selling — 

  • Did Fed flop on call for “patience” on inflation?
  • Possible tightening of computer chip market
  • Overall economic still looking hot into summer

We’re Watching: Remaining cautious, patient with cash in hand —

  • Friday for more selling and possibly worse next week
  • Cutting any losing positions
  • Setups for cash heading into a rally