Eh, I wrote about the possibilities A, B and C last week. Totally wrong. No one expected such a volatile move to the downside.
Read about corona, the president and a coming recession:
Doooooown!
Not A, not B, not C. And not D, E, F or G … 😉 The last week was one of the or the most volatile week I ever experienced. While day trading the futures I could recognize that some 5-minute-candles made 10 points or more. On other days 2 or 3 candles moved almost 1 point.
Now the chart is shouting for a bullish move. Price changed to a unbelievable fast move upwards on the last 20-25 minutes on Friday. This supports the idea.
I see a high probability in some bullish days next week, maybe over the next 2-3 weeks. But I am quite sure that we will go to the downside again.
After reading many market analysis reports, for me there are 4 reasons for this correction:
- The corona virus spreading all over the world step by step. But there will be more concrete scenarios of experts soon. And I do expect them to be much worse than before.
- Because Bernie Sanders will most likely not support the stock markets as a president that has been partially priced in.
- Before elections the institutional traders start with bigger hedge positions. Maybe this supported the correction.
- More and more companies showed first signals for a coming recession. And because it is expected for autumn or winter, it is probable that a bear market is starting about 6 months before – soon.
All four were responsible for triggering this correction. But all four could lead to lower prices with a high probability in my opinion.
Of course, I will always react to what the candles show me. But it’s helpful to have a picture in mind of what could happen.
Lucky coincidence
Watching the correction, I decided to buy a first partial of another long term position. It had to be a company that would survive a bear market for sure. And so, I chose MSFT.
For a second partial it has to fall much deeper or make the next big pullback in an uptrend. Here’s my entry I did on Tuesday:
The next one on Wednesday has also nothing to do with luck. It’s just a stop loss of an old position of GE bought in September (I had another one between):
But now the one I made a mistake that was one of my good mistakes: ACM. After it hit my 2 targets and I had some good profits I forgot to shift the stop loss to break even and to adjust the order size.
On Thursday the stop loss at -1R was hit and I had a small loss of the rest of the position. But also, a short position was triggered because the order size was bigger than the shares I had in the market. It’s already a profit of several hundreds of dollars (versus the loss of around $50). But I decided to let it run: If market will fall deeper, I will made more profit with ACM. If we’ll have higher prices I will have a loss but my running long positions will produce much higher profits. So, it’s a kind of hedge now – but don’t tell anybody that this happened to me(!):
By the way, my futures trading reached over $600 last week. Still with a paper account. With that high volatility. But on Monday I’ll go live again. Cross your fingers that I can continue the green days with real money. 😀
Excitement
I am so excited … oh yes. It’s a big chance if we’ll react wise. Because I am invested almost 100% I will sell some of my mid term positions if we could reach the all time high again. Then I would be prepared for both directions:
If markets will fall deeper, I have enough cash to buy cheap.
If markets will reach higher highs, I will make profits with the positions still running.
And because for me it’s more probable that we’ll get into a longer and bigger bear move, it’s the best decision for me.
So, I encourage you to make plans before anything happens. Be prepared for all possibilities and you’re far away from panic and fear.
Now, as you know my opinion about corona, the president and a coming recession, I wish you a wonderful new week, good decisions and huge profits!
