This Market is a Mystery

I am really having trouble understanding this market. The DOW was up 2000 points yesterday and was up another 600 today. I completely understand the world is waiting for the U.S. government to pass the big stimulus package, but will it really help?….long term!….. Who knows?

I’m trying to do as much reading as possible on this and I’m worried how much it will help. I hope this isn’t a buy the rumor, sell the news situation. If it is we are in for a big flop very soon.

I’m getting a lot of question about when I feel it’s time to get in this market. The bottom line is, I don’t know! I continue to keep my position balanced (like a good bookie) with Long and Short positions. I’m trying to stop the bleeding in my account. And I think it’s working because my account is going up. When the market is up I get out of some Long positions (and get in Short) and when the market in down I get out of some Short positions (and get in Long).

I’m completely perplexed on the airlines and the hotels moving up. Makes me wonder, who is investing in these businesses? Yes the stimulus will help them pay bills but if no one is flying this money will not last. Are you flying any time soon? Not me!

I am not a big conspiracy theorist but I do believe there are markets manipulated by very big, rich, greedy people. Is this happening now? Who knows? But this market is a mystery to me. Do I want to jump in on a stock moving up when it shouldn’t, possibly left holding the bag while hedge funds grab profits? Is this market being manipulated? Who knows?

Let’s look at some facts. The rate of cases is going up world wide, and the rate of deaths is going up.

Worldwide cases of the coronavirus have more than doubled over the past week. And they will keep rising sharply in the weeks ahead.

Ventilators and hospital beds are in short supply. So expect the death rate to soar.

Unemployment claims are spiking.

Many supermarket shelves are empty.

Stocks have fallen faster than they did during the financial crisis or even the Great Depression.

And it’s not just the equity markets. Credit markets have moving crazy too.

We are experiencing a health crisis, an economic crisis, a liquidity crisis and a financial crisis, rolled into one.

The sharp slowdown in the economy , the sudden disruption of household income, and overburdened healthcare facilities require smart, immediate action from Washington. Yes! But will it help? Hopefully yes! but we are in uncharted territory. The country never experienced anything like this. This is completely different from the Great Recession or the Great Depression. They were only financial and banking issues.

So, am I a buyer? Absolutely not! I only buy Long positions to balance my portfolio. I might not get back in at the very bottom, but things are gonna have to get much better before I “invest” in a company. I will continue to swing trade with my Long & Short positions. Hopefully my account will grow slow and steady, steady and slow.

Everyone has to do their homework and decide when they want to get in this market. I ask you to be very careful. Don’t let greed and the desire to get rich have you make bad decisions. If this is to be your “Get rich quick” scheme you are gonna have to make perfect decisions. And have a very strong risk tolerance because the volatility is not over.

The VIX is at 63.50 as I write. It’s been as high as 80 in the last few days. 3 weeks ago is was at 15. For you who don’t know what the VIX is, it’s the S&P’s Volatility Index. Some call it the “Fear Factor.” The higher the number the more fear there is. A lower number means less fear. The VIX went up 10 points from yesterday.

BE VERY CAREFUL!

Please let me know what you think about what I say.

Successful Trading,

Steve

The Options Coach