Tackle Today: The Drop was only a Dream
August 24, 2021
≈Bulls return right where they were supposed to ≈
Traders,
Remember last week when small-caps got punched in the face for four days in a row? Well, over the past two trading sessions, the Russell 2000 Index regained nearly all that was lost. It’s as if the selloff never happened.
Traders who got stopped out of short-term positions last week are right to wonder if it was all just a nasty trick to shake them out of their trades. But you can stop wondering.
Of course, it was a trick.
This is what the market does from time to time. It’s embedded deep in its DNA. You have every right to complain or shake your fists at the market gods above. But it’s unproductive. The better path to take is mapping out a plan to turn this type of nasty volatility to your advantage.
Here’s a list of what didn’t work during the past week’s dip and rip.
1) Entering short trades into the hole.
2) Buying puts or selling covered calls after IWM was down six days in a row.
3) Abandoning your well-thought-out positions for fear of steeper losses.
Meanwhile, those who held firm and knew how to turn the adversity to their advantage have been rewarded. Such techniques as converting short puts to long stock, scaling into additional naked puts/bull puts, and deploying new short premium positions into the VIX spike all worked well.
If everything I just said sounds foreign to you, then take a stroll through the Options Theory and Tales of a Technician blogs. Or, better yet, join the growing crowd of top-shelf, dedicated traders in the Team Phoenix trading lab, where I discuss how to do all of this and much more every day using our Discord channel.
#TeamTackle
Chart of the Day
Crude Awakening
Oil prices surged 5.9% on Monday, boosting sagging energy stocks in the process. The sharp reversal came after crude’s seven-session slump. It was desperately needed and is arguably the biggest reason why small-caps made such a comeback. Let’s see if buyers can expand their beachhead and reverse the daily downtrend.
Video of the Day
Onboarding with Coach Frank
Coach Frank always does a fantastic job highlighting the new and existing features for new members to the Tackle Trading community. Last night was no different. Check out last night’s onboarding session with Coach Frank if you want to see what Tackle Trading has to offer you.
Today’s line up
Traders Lounge 11 AM EST
Join the coaches in this live lounge, ask questions, discuss ideas or just sit back and listen to veteran traders discuss market conditions.
Halftime Report 12:30 PM EST
The Halftime Report starts at 12:30 EST and covers what news is driving the market, chart analysis from the movers and shakers of the day and fun in a way that only Matt and Tim can deliver.
Coaches Show 8:30 PM EST
Join us every Tuesday at 8:30 PM EST for the Coaches Show! Tonight Coach Gino and Greg will be hosting the event.
Financial freedom is a journey
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