Trading Room – Mon 29 Oct 2018
Stocks fell sharply on Friday in U.S. as investors slogged through another volatile session on Wall Street.
The Dow Jones Industrial Average closed 296.24 points lower at 24,688.31 after dropping 539 points at its lows of the day. The Nasdaq Composite dropped 2.1% to 7,167.21. At its lows, the tech-heavy Nasdaq had fallen more than 3.0%.
The S&P 500 fell 1.7% to 2,658.69 and briefly entered into correction territory, trading more than 10.0% below its record high reached in September. According to one report, the average stock market correction in the US, since WWII, results in a 13.0% drop and lasts for four months if it does not turn into a full-fledged bear market.
Note: Certain info presented here has been redacted to comply with the agreement with elite members of the mPower Algorithm program and mPower Trading program. Please refer to the full report inside for the complete info.
A number of outside issues have been overshadowing what has been strong economic data and overall good earnings in the US.
Some earnings disappointment, fear of rising interest rates, a brewing conflict between Italy and the European Union over budget spending, criticism of oil power Saudi Arabia after the killing of a dissident journalist and finally, worries that world growth is losing steam are just some of the concerns of late.
But these could just be side noises to justify the arrival of the bears which are already long camped outside the house to gate-crash the party.
So, what can a trader do when the bears finally turn up at the party? The bulls have dominated the global markets for so long and Bursa Malaysia have been very resilient as well, until recently of course.
If winter has arrived, can the bulls survived and stay strong like a rose under the winter snow?
All is not lost as elite bulls can thrive under all market conditions.
In the current Bursa Malaysia environment, full equity funds and portfolio traders should only hold selected defensive and resilient stocks like those highlighted under the Model Portfolio Sheet of the mPower Trading and mPower Algorithm programs.
Stand-alone elite traders should use our Hunting Sheet and Master Algorithm to “hunt” only selected trading stocks at the right price and time and minimise their exposure to the market at all other times (after all, it’s a falling market).
When the market is volatile and direction is uncertain, traders should always rely on a systematic way of managing their trading (like an algorithm or a rule-based method) rather than be rocked by emotion and getting thrown off by each conflicting media or analysts’ comments and headlines.
The key trading plan for long (bull) traders under the current market environment is not to stand in front of the train and let it pass. However, it’s a myth that long (bull) traders cannot prosper in a bear market, in fact far from it.
Read this post to find out how a bull can navigate and outflank the hoards of bears in a bear market.
Short (bear) traders meanwhile can certainly hitch the ride of this fast-moving train, which is likely to mow down everything in its tracks.
Like a rose under the winter snow, armed with the right strategies and knowledge, elite traders can easily thrive in a bear market.