All Kinds Of Yellen Creates Market Chaos


Simpler Trading Team

May 04th 2021  .  2 min read

What happens when the market gets hit by a bunch of Yellen?

Janet Yellen, U.S. Treasury Secretary, delivered frosty comments on Tuesday suggesting higher interest rates are likely needed to “make sure that our economy doesn’t overheat.”

And the stock market went cold as investors reacted with a flurry of selling that kept the day’s session chaotic.

The Dow bucked the chaos to some degree by closing at 34,133.03 points to gain .06% (adding just 19.80 points on the day). The Nasdaq tumbled to 13,633.50 points for a 1.88% drop while the S&P 500 was also down by .67% to 4,16466 points.

Traders following Simpler’s team in our online community knew the plan prior to the Fed’s icy message was to stay cool in cash, limit position sizing, and follow well-managed risk assessment.

Trading the news is not part of a sound plan, but being prepared for panicky market reactions surrounding the news is part of our plan.

The bears took control early Tuesday, doing their best to push stocks lower. This left open possibilities for buying at lower prices in anticipation of the market continuing the overall uptrend. Still, there is always caution that the pullback could be extended, so goal is to walk softly forward in Yellen’s icy world.

The market struggled late as traders tried to decide if the session was a solid negative or if the Fed was just making noise.

In “reactive” conditions like this, sometimes trade opportunities develop later in the day if internal signals start to shape up and leading tickers (like Big Tech) start to move higher. The last hour of the day can provide direction for next plays that won’t freeze up capital.

Any current setups not holding up to our plan are targets to cut loose and move on to the next possibility.

We Saw: Fed sending chaos rifling through market – 

  • Traders get panicky, send stocks downward
  • Transportation sector fueled by lack of truckers?
  • Warnings of higher interest rates, inflation

We’re Watching: Tech sector recovery from Tuesday hammering –

  • Car-for-hire stocks that might regain footing
  • Will Elon take over internet satellite service?
  • Setups in: GOOGLE, SHOP, BIG