Tackle Today: Bears Strike
August 19, 2021
≈ What’s Your Plan?≈
Coach Tyler here. The stock selloff turned nasty Tuesday afternoon after the Federal Reserve meeting minutes showed members were open to advancing their tapering timeline. The S&P 500 closed down 1.09% and breached the rising 20-day moving average.
For now, the damage has been minimal for large-caps, but smaller, higher beta companies can’t say the same. The Russell 2000 Index is testing its 200-day moving average and the lower end of its trading range as I type.
We can’t stress enough how important it is to have a plan for managing positions before bears arrive to spoil your picnic. Decisions made in the heat of the selloff are rarely good ones. For those of you who are part of our trading lab teams, are you noticing how each coach has already mapped out what they’re going to do if prices fall further?
Maybe you just get stopped out of a position. Maybe you scale-in at better prices. Perhaps your naked puts become long stock and you recoup your losses over time. The exact method matters less than the fact that you have a process.
Managing existing positions is only part of the equation. The other part is how you’re going to take advantage of the downturn. This will create a wonderful buying opportunity at some point. Do you have a plan for taking advantage of it?
Chart of the Day
Russell 2000 Tests 200-Day
The Russell 2000 is continuing its selloff in the wake of the Fed meeting. RUT futures are below the 200-day moving average and testing the lower-end of their seven-month range. If we crack here, watch out below.
Video of the day
Join Coach Greg, Emily and Mark for another edition of Trade Masters
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Halftime Report 12:30 PM EST
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