The narrow focus on volatility has served us well this week as the markets continue with their swift selloff. Earnings have been a bit better then I think most were expecting but it does not seem to matter. Every pop we have seen in the markets have been sold almost immediately. The amount of negativity out there by investment firms and analysts is staggering.
We have heard many times you can't fight the Fed and we can't fight the trend either.
Many sectors have convincingly broken through their long term trends and now face a reversal of trend. How long this reversal will last is anyone's guess. It will depend on whether or not we really are headed toward a recession. It will depend on the actions of the Fed and how fearful the market becomes. The market has clearly gone from the buy every dip mentality to a sell every rip.
We will, at some point, have a viscous snap back and those can present some fantastic returns as long as you don't overstay your welcome. This isn't time to panic its time to build your strategy and plan. Reevaluate all of your positions ask yourself why you are holding them and do some research and make sure the thesis is still sound.
If the reasoning has changed or the fundamentals no longer make sense consider exiting your position when that snap back occurs. If you have companies that you plan to hold for years where your thesis hasn't changed and the fundamentals still make sense have a game plan on how you would like to build that position at discounted levels.
We can worry about where the markets may be going we can bury our heads in the sand and ignore everything or we can take action to minimize the impact.
I want to be clear that I am not suggesting dumping everything in a panic after we have had 9 weak days in a row. The snap back will come > Be patient and have a plan.
For short term trading focusing on volatility has proven to be very fruitful. UVXY TVIX and XIV have given us some very nice day trades. Even UWTI gave me a nice scalp swing opportunity. As long as the market continues to whipsaw the strategy should continue to work.
Gold and gold miners remain on my radar if the fear continues to rise and the selloff intensifies. At some point I would think the perceived safety trade would kick in.
Stocks on my radar premarket
Bullish and may have a swing or lottos in play
Cautiously optimistic
I am a long biased trader and in this environment I am only playing the volatility I will resume stocks on my radar when we get back to a more favorable market for those types of setups.
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