NASDAQ 100 Futures drop more than 3% as Summer is unofficially over
September is historically a weaker month for stocks, and it is no surprise given the rise in prices a little pullback is here. The NASDAQ has been the clear-cut winner since the lows back in the Springtime. Traders and investors a like continue to pile into the NASDAQ 100. Lagging the entire market have been Small Cap stocks as measured by the Russell 2000. It is the same ole story from this stock market. Perhaps it will never change, but all we can do is play the cards dealt rather than the ones we want. We would love to see small cap stocks lead this market higher. All we can do now is execute our game plan by our risk management process. Trying to be a hero in this environment is how you erode your account size quickly.
Hitting the newswire was GM taking a $2 Billion stake in NKLA. TSLA share offering and news of a competitor perhaps gaining a strategic partner is hitting shares hard. These names should be quite active intraday today. Given NASDAQ Futures are pointing to a 3% loss at the open it should be a fun trading day. One day does not make an overall trend for the market. Pay attention to the overall price trend of a daily and weekly charts. The prevailing trend will dominate.
Something to keep an eye out here is certainly distribution. Heavy volume selling in leading stocks and the stock market will indicate a further price decline. Even with support from the Federal Reserve we can still see this market endure a correction. Experts are predicting the Coronavirus to rear its ugly head once again along with the Flu season. Anything can happen in this market and why we stress a sound risk management process. Otherwise, you are exposing yourself to unnecessary risk potentially impacting your ability to make gains in this stock market. Big Wave Trading will always stress a sound risk management process.
No one knows the future. We are in a historically weak period for stocks. This does not mean we are going to collapse or rip into new high territory. Be nimble in this market environment. In addition to a seasonally weak period we have a Presidential election in November. 2020 has been one unique year and one challenging than anyone could reasonably imagine. Stay vigilant and keep an open mind.
