It's ugly out there. Sporting events suspended or canceled. Cruises canceled. Concerns about a passenger traveling through JFK. Travel plans greatly restricted. Schools closing. Black market toilet paper dealing.
Okay, so I made that last one up, but you get the idea.
The markets are feeling the pain yet again. The second limit down 7% halt intraday in a week. It feels surreal. There's no hiding today. The only thing green on my screens are a few Coronavirus plays, Zoom (ZM) and Slack (WORK) . Of course, that doesn't include inverse or volatility ETFs, but that goes without saying.
From talking to different people around the U.S. last night, just friends and family, but in many different industries, the work-at-home still seems like the play. Citrix (CTXS) isn't holding up well today, so that mention from yesterday probably won't get the end of the week trigger I would need to consider it on the long side of the ledge.
I find Slack in a similar situation to Citrix. I'm exploring a trade idea or two on Real Money Pro today, but I'll admit doing much is challenging. There's a setup there for Slack, but anticipation has been the death of a trader in this market. Anticipating a bounce may have won the day once or twice, but it has lost the war if you weren't a quick and willing seller. There's been absolutely no need to offer yourself up as the sacrificial lamb first buyer. Be all right with the knowledge that you won't catch the bottom. Many of those who have already tried now lay slain on the market battlefield. A "relief" rally won't get most of them back to breakeven.
And where is their stop? I'm guessing we've reached a point where they are not committed with no stop in play. Trades have become investments. Investments have become built on hopes and prayers.
For several weeks, my view has been to go home each night with my trading account in all cash or nearly all cash (greater than 80%), and I continue to espouse that view. Still, I think we are getting to a much more constructive area to consider long-side trade ideas. I have $253-$255 as one area of support for the SPDR and $230 to $235 as the other. Given where that lower-end range sits, you might understand why I'm not trying to call a bottom or catch the knife yet. That's still 10%, which likely equates to 20% to 35% in high growth and momentum names like the ones I like to trade.
The new market paradigm is firmly in place. We know dip-buying is no longer being rewarded. Mistakes, long or short, are not being forgiven. Capital preservation should still be your top priority. This too shall pass. Your job is to make sure you are in a position to take advantage when it does.
