Manage Positions As Trades Can Sour Quickly

2021-04-20

No turnaround this Tuesday as the stock market continued to pull back across the board.

The Dow closed at 33,821.30 points to fall back .75% (dropping 256 points on the day). The Nasdaq dropped to 13,786.27 points for a .92% stumble while the S&P 500 lost .68% to 4,134.94 points. This was the second straight session of losses across the indexes.

Simpler’s traders are watching indexes and stocks reverting to the mean and how long the downturn lasts. They are eyeing whether the reversion presents opportunities to target long positions after key signals stabilize and then set up for another possible run up into the end of the month.

Squeeze setups across multiple time frames are signaling a build up of movement, but traders must wait for the move to “fire.”

While waiting the focus is to take any profits available before committing more in this environment. Market action like this can create opportunities while adding to the level of risk.

Simpler’s traders have seen well-planned trades sour quickly. This requires cutting loose these positions.

The market is working its way through big deals, earnings reports, political pandering, and mixed energy movement.

There are plenty of variables for traders to work through, including options expiration this week.

Simpler’s traders are limiting position sizing and number of positions to manage risk.

We Saw: Back-to-back sessions of losses — 

  • Big tickers stumble through earnings season
  • Canada buying up U.S. railroads?
  • Smaller streaming companies step up growth

We’re Watching: Reversion to the mean in indexes, key tickers —

  • Lead-up into monthly options expiration
  • Being nimble when plans get pummeled
  • Direction of firing for the many squeeze setups