Swing Trading Strategy:

A scary market indeed!

These are by far uncertain times for the stock market, bond market, currency markets, let me think, what else? Oh yes, commodities too. Have you seen oil prices crashing tonight? Down -32%!

DOWN 32%, I say!!!

While Coronavirus has had an impact on oil, this has more to with Russia and Saudi Arabia that are now engaged in an all out price war. If you thought Trump was extreme in his approach during the trade war with China, then it can be said that the Saudis went straight nuclear with the Russians. 

There’s a lot to digest here with the Sunday night futures – they are literally limited down. It points to a disastrous start at the open tomorrow for equities. For me it won’t be fun either, but the losses will be limited compared to the rest of the market as I am still 85% cash. Good chance that the remaining positions will be stopped out at the open and I’ll be straight cash by the close .

Here’s the thing, I’m not trying to be brave or be a hero in this market. Makes no sense to. Those are the people that blow up their portfolio, and with the kind of overnight price action being seen, there will be hedge funds blowing up tomorrow. 

Because Risk Management is my #1 priority, I have survived a lot of major sell-offs – in fact all of them, and I have certainly seen my share of them over the last 28 year in the stock market. Right now, I am preserving capital. I’ve done a little bit of shorting, but I don’t see the sense in doing that now with the VIX as elevated as it is. Tomorrow, my first focus will be to manage the positions that I have. Should the market flush out the buyers, there could be some buying opportunities, but I’m not expecting it at this point and instead, I will expect the worst until proven otherwise. 

You can check out all of my trades that I have made in 2020 – where I have been solid in the green both months by clicking here. 

Indicators

• Volatility Index (VIX) – VIX will find its way back into the 50’s tomorrow, and perhaps even the 60’s if the weakness holds up. This market is in crash mode and the VIX index supports this. These are the highest readings that we will have seen since 2008. 
• T2108 (% of stocks trading above their 40-day moving average): Closed 28% lower at 9%. Expect a possible move below 5% tomorrow, and this is when the reading gets extreme and close to a massive bounce. 
• Moving averages (SPX): Currently trading below all the major moving averages. 
• RELATED: Patterns to Profits: Training Course

Sectors to Watch Today

Almost certain that Energy will lead the market lower, considering oil prices are currently trading 32% lower. Relative strength will likely be found in Real Estate, Utilities and Staples. Further safe havens will be found in companies likely to profit from the Coronavirus. 

My Market Sentiment