So, you were cheering for the market to crash, What do you do now?

[ElCubano]

Indeed...That money may just stay on the sidelines for the rest of the quarter so they can get their kids the G.I. Joe with the kung-fu grip for X-Mas.

The Kung fu grip. Old school baby.

 

[tomorton]

What I do now hasn't changed. My trading risk management plan triggered and got me out of my long positions on indices and uptrending stocks. I will get back long again in these and similar when my uptrend set-up signals go green again. Meantime I have shorts and short orders on individual vulnerable stocks which were already in downtrends.

If I was an investor, I would continue to sit back with a glass of wine and wait for the dividends to arrive, while keeping an eye on more high yielding shares to buy and hold (for ever).

 

[DTB2]

What I do now hasn't changed. My trading risk management plan triggered and got me out of my long positions on indices and uptrending stocks. I will get back long again in these and similar when my uptrend set-up signals go green again. Meantime I have shorts and short orders on individual vulnerable stocks which were already in downtrends.

If I was an investor, I would continue to sit back with a glass of wine and wait for the dividends to arrive, while keeping an eye on more high yielding shares to buy and hold (for ever).

Looking at TXN right now

 

[smallfil]

You have to remember that stock valuations are based on formula's that mutual funds and institutional investors have to determine the fair value prices of companies.
That formula is partially based on the cost of borrowing money. So as interest rates go up, it reduces the fair value of stock prices.
The mutual funds and institutional investors input the new interest rate into the program (as well as the stock's other critical data factors and parameters) and a new stock fair value price outputs.
If the current price is now overvalued compared to the newly computed price, they issue new reports and give those stock's a haircut. Most indexed stocks are affected.
Since roughly 80% or more of most indexed stocks are held by the above mentioned Big Guys, the market falls.

Prior to both the Bear Market of 2000-2002 and the Financial Crisis of 2008-2009, the Fed had cranked up the Fed lending rate to the 5.0% or greater. (Even higher in some prior Bear markets.)
In the link below, carefully observe the green line (Fed Funds Rate) in the lower chart.
You can touch the green line with your cursor and it will roll to various years and produce values. Check out the years 2000 and 2007.
https://www.crystalbull.com/stock-market-timing/Fed-Funds-Prime-Rate-chart/

Thanks for sharing. Quite informative. Remember Alan Greenspan when he was the Federal Reserve Chairman? He kept raising interest rates over and over until the market crashed?

 

[smallfil]

Now, my mistake was not clarifying the crash, pullback or correction if you wish. Whatever you want to call it. Longer term, if you were position trading, you would be using the weekly chart and the trend is intact so, you can sit back and relax. Of course, you still suffer from the drawdowns which eats up any profits you already have. If the market goes back up, you can regain those profits. Now, if you were day trading or swing trader (like me). The 3% drop in the Dow is nothing I guess if you trade the indexes. I do not trade indexes for the most part and probably, the day traders as well. My trades last 10 days maximum so, this matters more for us because of the short time frame. We also, trade individuals stocks which took a far larger hit than that 3%. AAPL fell $10.51 or 4.63%, MSFT fell $6.10 or 5.43%, NVDA fell $19.85 or 7.48%. And if you trade stock options, with the leverage, the swings are in the 100% and up range. Now, just explain to me how people lost huge sums all in one day and others to make huge sums if it was just a 3% move? It is not a 3% move, way more than that! Add leverage to that is and we are talking 100% moves. Maybe, you do not see it because you just trade the indexes but, it is there! This is not merely a 3% move! The bid and ask spreads also, get wider and much harder for sellers to get out at favorable prices. Buyers will bid down prices knowing the sellers are desperate.

 

[tomorton]

Its all a bit confusing smallfil, what you've posted, though I admit I'm not doing much of the stuff you're talking about.

However, I am a UK-based spreadbetter and was long S&P. My stop was set at 1% of my account capital, and I benefit from 20:1 leverage when SB-ing indices. My capital loss when the S&P stop-loss triggered was exactly 1%.

The fall in prices will probably be cancelled by a resumption of uptrend and if so the theoretical upside is infinite. Of course, if the market goes into a downtrend, I will short the US indices until the downtrend stops, and maximum theoretical price fall is 100%. Since indices have natural buoyancy and the US indices have been in an uptrend and are not in a downtrend yet, I expect uptrending to be more probable.

 

[tommcginnis]

I lost 4k trying to buy the dip on NQ yesterday, this is in my short term futures account. In my long term account I am holding long from 2885 S&P but its no leverage etf position so Im not sweating it yet.

So, you are trading without trailing stops...

 

[smallfil]

Its all a bit confusing smallfil, what you've posted, though I admit I'm not doing much of the stuff you're talking about.

However, I am a UK-based spreadbetter and was long S&P. My stop was set at 1% of my account capital, and I benefit from 20:1 leverage when SB-ing indices. My capital loss when the S&P stop-loss triggered was exactly 1%.

The fall in prices will probably be cancelled by a resumption of uptrend and if so the theoretical upside is infinite. Of course, if the market goes into a downtrend, I will short the US indices until the downtrend stops, and maximum theoretical price fall is 100%. Since indices have natural buoyancy and the US indices have been in an uptrend and are not in a downtrend yet, I expect uptrending to be more probable.

I think you have a different way of trading in the UK which would not apply to US traders so, an apples to oranges comparison. The DJIA dropped like 3.15% but, that is just 30 companies comprising that! We have 10,000 stocks in the US markets trading every day. Most traders and investors trade individuals stocks and they sure dropped more than the 3.15% so, it is not a fair comparison. With the leverage of options, 100% moves during the day is common in the US markets.

 

[tomorton]

I think you have a different way of trading in the UK which would not apply to US traders so, an apples to oranges comparison. The DJIA dropped like 3.15% but, that is just 30 companies comprising that! We have 10,000 stocks in the US markets trading every day. Most traders and investors trade individuals stocks and they sure dropped more than the 3.15% so, it is not a fair comparison. With the leverage of options, 100% moves during the day is common in the US markets.

100%! Cor Blimey O'Riley! (as we say over here)
Why would anyone trade under those conditions?

 

[jeffalvinson]

And there it is! The SP500 touching the its 200 day moving average.
Will it bounce off it? or break down through it?

[SP500, 1 month, daily candles, 200ma (blue line)]