I Profit When The Market Is Down: Strategies for Success

THE WEEK

Sellers were in control all week of NASDAQ stocks with higher than normal trading volume.  That was understandable with many of the Tech stocks reporting earnings beginning next week and through the following week.  There was also the CrowdStrike update glitch that caused Microsoft to crash effecting many large concerns including airports and banks worldwide.  Other stocks were pulled down by the reaction which again is typical.  I see market movement much like a herd of cattle.  The cows tend to stick together and move together.

S&P 500 stated the week on an up note hitting a new 52-week high  on Tuesday and then faltering throughout the rest of the week.  I believe it was being drugged along by the NASDAQ downturn.

The Russell 2000 stocks saw stock  prices zooming up on very high volume hitting a new 52-week high until Thursday.  Those stocks also went down with the rest of the Market just not as hard or fast.

LOOKING AHEAD

The next two weeks will see heavy Earnings Announcements with a strong majority being in Tech Stock sector.

There is always a reaction by the trading as an announcement is made.  We also have a handful of Economic releases which cause reactions in the Market.  During the COVID years and the subsequent inflation period these announcements caused huge market moves and in many cases those moves lasted a long time.  Lately, the reactions have not been as strong nor long lasting.  The announcement I am watching most is the PCE which is released at 8:30am Eastern on Friday.  The PCE (Personal Consumption Expenditures) measures the cost of living for households by measuring a “basket” of good and services.  The Feds rely heavily on this index to measure inflation.  I am expecting an up reaction to the announcement.

HOW AM I DOING?

I had a very modest gain of 1.76% this week with the Market down -2.0%.  Because the Market had been on the rise I was in mostly Credit PUT Diagonal Spreads trade (Money Presses).  I lost on those trades when the Market did a sharp reversal on Wednesday.  I bought back the short positions and now hold only the long positions which will work well as prices drop.  I am in recovery mode.

When discussing trades on the Investing Buddies webinars, I frequently will talk about the Greeks when making trading decisions.  I had an email requesting I go into depth about the Greeks on Thursday’s webinar.

Thank you, Shawn, for letting me know where your education needs shoring up.

Thursday’s Webinar:  THE GREEKS and how they affect Option Pricing