Mixed Market Creates Violent Chop


Simpler Trading Team

Sep 16th 2020  .  2 min read

A Fed meeting, Quadruple Witching this Friday, and technology stumbling have created a violent back-and-forth in the stock market that has traders searching for direction.

This type of market tends to trick people into thinking there are good moves to the upside before ripping back to the downside and then repeats the pattern.

Simpler’s traders aren’t expecting any big moves heading into the end of the week as they wade through the rough chop.

The market does present opportunities for seasoned traders to play both sides of the market while newer traders might want to stay in cash and watch all the action.

As indicated before, indexes are “iffy” in this chop while the setups tend to be in individual stocks not following the index trends. Simpler’s traders are watching for exhaustion to downside in indexes and any opportunities to take advantage of quicker short plays.

Setups have formed in stocks actually surging in the current economic environment, i.e. recreational vehicles, home improvement. Consumers with steady income have seemingly redirected spending from struggling industries, i.e. restaurants and travel, into these surging markets.

There’s one trading day before Quadruple Witching Friday, so caution is the play to avoid getting caught trying to wade into this violent chop.

We’re also watching how traders react to a possible harsh pullback which would be ugly for those caught off guard. Such a flush doesn’t mean there is technically anything wrong in the market, because the expectation is it could take some time before a run for new highs resumes

Our traders are scrapping it out for the week and the main goal is protect what you have while cautiously searching for opportunities.

We Saw: indexes struggling in mixed market — 

  • Technology sector bringing down Nasdaq
  • Fed trying to stay out of the way
  • Oil with a strong day

We’re Watching: for opportunities underneath the trend —

  • What Witching Friday holds for markets
  • For any signs of a pullback
  • Taking profits on hand as we can

Does it make sense to “see” price moves before they happen? Learn about catching “pops and drops” in a volatile market.