Wednesday it was the bull's turn to benefit from the extraordinary volatility. Today it is the bear's turn to capture some momentum in the price action.
If you are a short-term trader it can be exhilarating action but if you aren't clear about time frames and don't manage risks then you can rack up some very quick losses.
I discussed Wednesday how I was looking to short the indices. Today on Twitter I outlined how I traded ProShares UltraPro Short S&P500 (SPXU) . The essence of the trade was to ramp it up very quickly once the S&P 500 made an intraday low after the first hour of trading. This worked very well as momentum quickly intensified once the support level fell. I have already closed out the majority of the trade for a profit and will look for another opportunity as this wild market action continues.
I point this out because it is about the only sort of trading that works in this sort of market. While there are long-term holders that talk about putting money to work there really is no reason to do that while the market is acting this poorly. There will be plenty of time to build positions in individual stocks for the longer term in the future. Just stay patient. There is high risk that we have not yet seen the lows.
It is extremely important to have clarity of style in this market and not to try to pursue trades that just aren't working. As I've commented this is not a good market for stock-picking as the action is mostly index driven.
There will be a few individual stocks that work, but you have to be highly selective. I added positions Thursday in Slack Technologies (WORK) and Sangamo Therapeutics (SGMO) . However, stock-picking is tough unless the stocks have some coronavirus connection or are in a sector that is somewhat immune from the problem.
Defense is more important than offense right now, although that doesn't mean that you still can't score a few points.