Look Out Below!!!
Good morning folks, and welcome to the Rude Awakening!
Before we get started, a quick reminder: If you have any questions, comments, or ideas you want to share, I’m here to help! Just email email@example.com. I can’t give you personalized investment advice, but I want to help make the Rude Awakening Pro the best it can be for you, and your feedback and questions are crucial in that.
Now, let’s get to today’s market action…
Markets in Correction Mode
Markets are getting absolutely hammered this morning. The NASDAQ was down 300 points, premarket.
Is this the big intraday reversal everyone’s been hoping wouldn’t come?
We believe it is.
We had a nice bottoming taking place after the last massive correction a couple weeks ago. Then we had a buy signal kick in that was looking to remain after a few days of confirmation in upward momentum.
But, yesterday’s action may have been the classic tale of…
“Buy the Rumor, Sell the News”
After the Fed announcement confirming we would not see any major changes in interest rates, the market had a quick and immediate pop to the upside.
But then, shortly after, the market began selling off, which continued throughout the day, ending up with a big negative intraday reversal.
Now, what could have caused this?
Well, as accommodating as the Fed has been all year…
It has absolutely decimated the dollar. But now, things are changing. And that’s NOT good for the markets.
What Does a Weaker Dollar Actually Mean?
A weak dollar makes US companies more competitive in producing and selling goods to the rest of the world.
But now, for the first time in a very long time, the dollar is starting to gain strength, which makes US goods less affordable and marketable on a global scale.
This strength in the dollar is combining to just wallop the marketplace.
The NASDAQ is falling dramatically…
Gold is in a massive selloff…
Silver also getting smacked down…
But then, as we’d expect…
A Flight to Quality
The government bond market is shooting to the upside in a big way.
When people get scared out of the marketplace, it has to go somewhere. We’re seeing it fly directly to bonds.
So, now we have two questions to answer:
- How do we trade this market?
- Is this the selloff we have been looking for to make a decision on this marketplace?
If we look at the daily chart on the S&P 500, do we have the confirmation we need for a directional change?
It’s looking like yes.
We are now sitting below that 50day MA. This tells me we are facing a “look out below!” sell signal.
We can’t yet know if this signal will hold, but we will find out over the next few trading days.
But what’s important to recognize is that these massive swings are still coming at us. We went from seeing the overall market in a big selloff, to buy signal support, to a brand-new selloff all in just a couple weeks. We are currently in FULL sell mode.
How do we take advantage of today’s massive downturn?
Trading the Overall Market
We are looking to trade the SPY, the ETF that tracks the S&P 500.
Of course, we’ll look to do a bearish trade here, set to profit on the downside.
To find out about our SPY trade idea to benefit on downside action, 9%+ profit potential in just 6 days, click here to sign up for the free beta test of the Rude Awakening Pro. There’s still time!
But for now, I’ll leave you with this: Like I keep telling you, play the markets as they come. This is a trader’s (NOT an investor’s) market! Although this selloff is a massive swing, it doesn’t have to hurt your ability to profit.
That’s it for today.
But remember, if you have any questions, comments, or ideas you want to share, we’re here to help! Just email firstname.lastname@example.org. We can’t give you personalized investment advice, but I want to help make the Rude Awakening the best it can be for you, and your feedback and questions are crucial in that.
Editor, Rude Awakening