Looking Ahead For Next Market Wave

2021-01-29

All the buzz across the news and stock market is about the “David vs. Goliath” online trading feud.

Sides have been taken, legal action is in the works, social media users are crying for justice, and the news media relishes fanning the flames of controversy and chaos. Tense conversations abound on whether this “us vs. them” collision is a blip on the radar or the beginning of something bigger.

Losses mounted across the board in the stock market on Friday, including the first time the Dow closed below 30,000 since late last year. Hedge funds have lost billions in short positions.

The Dow closed at 29,982.62 points to fall 2.03% (dropping 620.74 points on the day). The Nasdaq dropped to 13,070.69 points for a 2% tumble while the S&P 500 dipped 1.93% to 3,714.24 points.

Major Big Tech stocks were down on the day as well. By contrast, GameStop — which is at the center of the “David vs. Goliath” tussle — spiked 66% to 328.24 at the close. This after retail traders were open to buy the ticker again, pushing further against big player short positions.

And the market rolls on.

Flowing underneath all the hubbub, the current market environment is less like a fist fight and more like a surfing contest. Trading today boils down to who can catch the next wave up or down and who is willing to get back up again after a fall and catch another.

So where to go from here?

Simpler’s traders are taking it one day at a time. January was a challenging month, but if market history pans out February is expected to be a more positive, exciting month.

Whoever yields (if anyone does) in the “David vs. Goliath” arena won’t affect our plans to continue focusing on setups that avoid risk. Technical analysis and internal market signals guide the Simpler team daily.

Riding the trends as long as possible supports efforts to be well-positioned and covered by different strategies. This combination allows traders to work setups when a market explosion, or implosion, hits the charts.

No one knows what will happen next week or next month. We’re waiting and watching for the size of the next wave and which direction it will break.

We Saw: “David vs. Goliath” market tussle intensifying — 

  • GameStop back in play for retail traders
  • Hedge funds taking massive short-side losses
  • Robinhood taking a beating in the public square

We’re Watching: Market recovery into February, or not —

  • Positions that avoid the public fray
  • The “David vs. Goliath” saga with popcorn in hand
  • Setups that can ride the next wave