Market Wreaks Midweek Havoc Across Board

2021-01-27

Wednesday was a day of havoc in the stock market as the Fed held the line, fast-rising tickers locked up trading platforms, earnings expectations went wild, and the stock market gapped into the red.

The Dow closed at 30,303.17 points to fall 2.05 % (dropping 633.87 points on the day). The Nasdaq dropped to 13,279.47 points for a 2.54% tumble while the S&P 500 crumbled 2.54% to 3,751.83 points. The S&P is now negative to date in 2021.

The market also braced for after-hours news — APPL, TSLA, BA, and more earnings reports.

Anyone on the wrong side of this sharp pullback is reeling (like several hedge funds). Haven’t Simpler’s traders often said that being flat is a trading position?

Still, with all the havoc, GME, AMC and other outliers (including BBBY in retail) spiked higher during the Wednesday session while bigger names such as FB, AMZN, and GOOGL were down.

This downside wave ripped throughout the market — cryptocurrency, forex, energy, financials, retail, and more. The current pattern is reminiscent of devastating reversals of the past.

What’s next? Waking up Thursday to a new, wild day in the market after it digests the havoc overnight.

Veteran traders know this is part of the cycle of trading that isn’t “fair” and can at times be ruthless. This moment in time within the ebb and flow of the market is a replay of what has happened in the past. It may not be any consolation to some, but there is nothing new under the sun in trading.

A question to ask is, “Does it get worse or better from here?” As the cycle of market history has shown, no one knows the answer and many won’t like the outcome.

Simpler’s traders are working to ride out the worst of what the market delivers and be ready to take advantage of the next move. The key is to adjust each day from one decision to the next. 

Isn’t there a nursery rhyme out there that might apply to trading in this market?

“Jack be nimble, Jack be quick...”

We Saw: Fast-moving sell-off across the board — 

  • Outlier stocks GME, AMC soaring
  • Big Tech taking hits despite profits reported
  • S&P 500 falling into the red so far this year

We’re Watching: After-hours earnings effect on Thursday open —

  • How wild can Thursday get?
  • Cash, and to be or not to be flat
  • For higher-probability setups with clear signals