Despite seeing more green on my screen during a down day than any time I can remember before, the overall markets simply cannot muster much in the way of a rally. The Volatility Index has actually remained FLAT while the S&P is down by 5%, which strikes a little odd until I consider the March VIX contracts closed yesterday and settled this morning, so we're now looking at April contracts which are a month away. It's hard for anyone to imagine these levels of volatility will remain for another whole month, but we're into no man's land right now. The S&P 500 has closed higher or lower by 4% or more seven straight days. This is a first. In forever. Not 1987. Not 2008 or 2009. Not even 1929.
Today, we're threatening to make it day eight in a row.
Yesterday, I talked about us needing boredom. While the green day was a nice reprieve, it didn't last, and the big move brought more of what we are seeing today. This market will struggle to bottom if we don't get a few days of tight ranges.
A big takeaway from the past few days is if you get a huge pop, even on a partial sized position, I wouldn't hesitate to grab some profits. Names like Fastly (FSLY) and Five9 (FIVN) , along with Citrix (CTXS) , showed huge recoveries yesterday, and even early today for two of the three. No one will fault you for taking a 20% gain on a position in two days even if it was only one-third or one-tenth of the size you intended to take.
Cash and flexibility remain king.
And there's no shame in taking a quick loss if you find yourself uncomfortable with your holdings, even a new position. I tried a scalp today on the Nasdaq where the index immediately reversed back to the lows 10 minutes after my entry. I took the quick loss. I could have waited for another 20 minutes and exited, likely with a small gain, but I found my leg bouncing a little faster and my finger twitchy. I wasn't comfortable.
I'd rather take the small loss and be comfortable, then push the anxiety levels for a couple of bucks. Yes, I'll be slightly annoyed with myself for possibly jumping out early, but if we continued to fall the rise in anxiety and self-punishment would have been far worse than the loss.
This is the utmost important time to know thyself. You don't have to catch every bounce. You can't beat yourself up for missing days like yesterday if it also means missing starts like today.
There is a positive from today and that's the green we're seeing in some individual names. Cloud names (former big growth) have pockets of strength. Some investors are realizing tech will not only continue on, but may be an even bigger need than before, so seeing the WFH (work from home) and hoard groceries plays widen should give us a little stability, but I'm stressing the word LITTLE. The better word might be opportunity; however, remember a larger cash position isn't a negative here. We'll still have some wicked sharp bounces, but when the market gets on the road to recover, investors can do well. No one needed to catch the absolute bottom in 2001 or in 2008/2009 to do well over the next five to seven years.
