Look To Change Strategies As Markets Pull Back

2022-01-13

Another day of the market twisting and turning as it unfolds uncertainty almost on an hourly basis.

Volatile markets have Simpler’s traders reviewing trading strategies as pandemic concerns drag on and inflation across the economy digs in deeper.

This has been no surprise to Simpler’s traders. Supply and demand issues have caused pent-up frustration for months — and government banking announcements only served to validate the reality of inflation.

During market chop, Simpler’s traders sharpen their options trading skills. This market offers just as many opportunities to be right as it does to be wrong.

Simpler’s traders look to the charts for signals of a squeeze — whether daily or monthly. When the market gives up the signals for a monthly squeeze, it’s like having the wind at your back. When the squeeze runs out of momentum, a trader has less chance to steer through the volatility.

When stocks and the indices lose support – much like recent days – a changeup is in order as traders look for better setups. Right now, the market appears to be making a transition from technology stock and making its way into value stock.

While Simpler’s traders do expect some areas of the market to bounce back, the turbulence of a bearish market is grumbling to take over.

Traders will do well to remember — the market will do what it wants.

This is the time to wait for the trend to unfold. This isn’t the time to hold on to favorite stocks because of public popularity or for emotional reasons. The favored technology stocks have a tendency to not do well when interest rates increase and, as of late, they have been retesting back to their mean stock price.

As the market experiences correction, Simpler’s traders look for opportunities to trade as the market pulls back or goes through more chop. The three major indexes proved this insight again today. All were down with the Nasdaq peeling off 2.51% on the day.

Finding the path of least resistance through this twisting and turning is where adaptive traders find opportunities in what is a shorter-term trading environment. This is when Simpler’s traders keep expectations real.

The strategies of yesterday may not work today, so Simpler’s traders are developing new trading skillsets, when necessary. This market won’t give up many easy moves until current conditions change.

Until the market decides to roll over (if it does), Simpler’s traders are keeping all of their options on the table.