Nibbling For Wins In Nasty Market

2020-09-23

Intense selling throughout the day sent markets into a steep decline, ending with nasty closing numbers Wednesday.

The Dow closed at 26,763.13 points to fall 1.92% (losing 525.05 points on the day). The Nasdaq dropped to 10,632.99 points for a 3.02% loss while the S&P 500 followed suit, losing 2.37% to 3,236.92 points.

As this market works to find whether it wants to trend up or down, traders must navigate the messy middle with no defined direction.

Keep in mind that the “why” of this market turmoil shouldn’t matter. The market could be responding to anything happening in the world, and how it’s acting is not something to fight.

Whatever is going on in the market, there is a process to trade accordingly.

For example, the intense selloff today hit hard against high-profile stocks like TSLA, down 10% on the day. By contrast, companies with less of a profile in the news headlines, like FVRR (up slightly on the day), were presenting possible setups.

This is a phase where the markets aren’t “easy” to navigate when compared to the extended uptrend prior to the pandemic crash in March.

The key is not to go into reactionary mode during this phase, and don’t get stuck in the messy middle if the indexes and stocks don’t produce solid setups.

Keeping a steady mindset and following a trading plan makes sense when facing this market.

Simpler’s traders understand this environment is stressful (they have money in the market, too), but they know to take a deep breath and watch for what the market will give.

Indexes and stock prices can swing wildly in either direction and Simpler’s traders will be tracking the patterns -- not the separate indexes or specific stocks.

There’s no plan to rush into any trade, just keep nibbling at possibilities and following solid setups.

We Saw: A nasty market losing ground quickly — 

  • Big-name stocks taking significant hits
  • Calls to brace for election volatility
  • VIX (fear gauge) moving higher

We’re Watching: For positions with a solid setup —

  • Missteps into messy middle wasteland
  • How calls for more stimulus play out
  • Being cautious, picky with limited setups

Learn to target precise entries and exits with “divine” tools — take a look at chart analysis.