Monday Market Mayhem Continues Losses

2020-09-21

September continued to relive its history of a bad month for the markets.

Early selling had the Dow down more than 800 points and last-hour buying couldn’t recoup a majority of the losses. The sharp gap down launched the third week of losing ground across the major indexes.

Negative news for banks and tech, oil retreating again, political turmoil, and mounting fears of a possible pandemic resurgence sent the markets reeling from the opening bell.

The Dow closed at 27,147.70 points to fall 1.84% (dropping 509.72 points on the day). The Nasdaq dropped to 10,757.02 points for a .34% loss while the S&P 500 stumbled 1.38% to 3,273.51 points.

Calling it a crazy day seemed inadequate as the mayhem broke out in overnight trading and gained steam throughout the day.

Simpler’s traders for the most part stayed out of the fray, maintaining cash positions and watching how the dicey market would pan out.

Traders continued to watch for support against the selloff, but across the indexes and key stocks the downturn pushed through established levels.

Monday’s action brought home that this is a different market after a long run up and navigating the sideways action may be difficult before a supported trend emerges.

As traders review various signals across time frames, any indication of direction begs the question, “Is this going to hold or not?” The problem in this panicky-news market cycle is there is no way to tell what breaking news, political tweet, or company-related event (i.e. the CEO resigning) will happen at any time and affect a stock’s or the market’s direction.

This market environment makes it difficult to find a trading edge and it seems like any plays are just throwing darts while hoping the play works.

Some tickers are so volatile that the expression, “Wouldn’t touch it with a 10-foot pole,” appears to be a valid trading position.

A market like this can cause traders to lean toward letting emotion guide their decisions on whether opportunities are close to levels that will hold — either chop or go higher.

As for Simpler’s traders, the goal is to not trade on emotion but instead trade on what the charts reveal.

We Saw: Diving start to the week across indexes — 

  • Banks looking fishy with illicit funds
  • Oil reversing off last week’s positive run
  • Technology tickers not looking solid

We’re Watching: our digital wallets, leaning flat —

  • If crazy consolidation can rally support
  • How sideways this market can go
  • Setups: not many, and cautious with any

Want to automate and expand your search for trading ideas? Save time and frustration with these proprietary signals HERE.