Last Friday’s 600-point drop in the Dow spooked investors and traders alike as the Coronavirus continues to stoke fears of an epidemic. As the number of cases increase headlines help push fear into those who will listen. We have no idea how this will turn out and neither does anyone else. However, given SARS, Ebola virus, Swine Flu and the like this will likely turn out to be a similar situation. TSLA has been killing shorts lately and the rout continues. This is precisely why we have cut loss rules along with position sizing. Shorting is a dangerous game as you have unlimited downside with limited upside. Shorts will likely be licking their wounds if they are able to stay in the game. This market is something else. With a Presidential Election later this year it will be interesting to see how this plays out. No one knows the future, but those who are willing to put aside their opinion can profit from this stock market.
Let’s face it this market is defying many odds. We can point out plenty wrong with this market, but it continues to prove people wrong. Everyone would love to see a bear market to help clear the decks. Why haven’t we seen one yet? We can point to the Federal Reserve pumping in Trillions as well as keeping rates low. Does this help us pick winning stocks? No. Now, directionally it helps us as a rising tide lifts all boats. However, we must be willing to ignore the noise and focus in on the stocks pushing higher. Stock market leaders is where we want to be from a swing trading perspective. Day trading wise there is always opportunities if you are willing to look. We are always finding opportunities and due to our risk management process have the dry powder to execute. Time to get on board with Big Wave Trading.
Where this market will take us next is anyone’s best guess. Panicking over news headlines and not acting on price alone will end up costing you gains. At some point we will see a bear market hit. No one knows when this will occur, but leading stocks via price action will be a huge tell. No need to have an opinion when price leads the way. We hope you have a great week this week!
