≈You Risk Missing out on the Biggest Up Days≈
Volatility tends to cluster. Big down days (like Monday) don’t lead to peace and calm. Instead, the violence of the plunge is usually echoed by the speed of the recovery. Tuesday saw stocks come roaring back, especially in the beaten-down Russell 2000. The small-cap-laden index surged as much as 3% intraday.
But do you know who didn’t participate in the vigorous snapback?
Those who puked up their holdings during Monday’s bloodbath. History tells us that a good chunk of market returns is packed into a few sessions. And if you miss those best days, your returns take a severe haircut. See the Chart of the Day for more detail.
Because volatility clusters, the best up days don’t occur when prices are trending higher above the 50-day moving average. Instead, we see the best days usually following the worst ones. This week is a perfect example. The VIX spiked on Monday, signaling big moves to come. That volatility sliced both ways. On Monday, it cut lower. On Tuesday, it cut higher.
Here’s the takeaway for long-term stockholders. The only way to guarantee you don’t miss out on the best up days and suffer the performance haircut mentioned in the chart below is to not sell on the big down days.
Chart of the Day
What Happens if you Miss the Best Days?
Video of the Day
The Queen’s Court
In this week’s edition of the Queens Court, the coaches bring separate trading picks for Coach Emily to review including Keycorp, Pepsico, and Oracle. Will she accept the trade ideas or will she lop off the coaches heads?
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.
Trade Masters 7 PM EST
Join us every Wednesday at 7 PM EST on YouTube as the Coaches go over trade ideas from the Trade Master’s crew!
Trading Justice Episode 433: Market Skyline
In this episode, the coaches analyze the current market conditions across stocks, commodities, and crypto-currencies. Stocks continue to push all-time highs, as the market remains bullish. This week will be busy from a news perspective, as earnings season begins for the 2nd quarter as companies like JP Morgan, Goldman Sachs and Citigroup, and Taiwan Semiconductor report, among others. Disney had big results from its movie debut ‘Black Widow’ over the weekend and reported strong numbers in theatres as well as streaming on Disney+, and Richard Branson takes his first spaceflight on his company Virgin Galactic’s successful launch. Listen in as the coaches analyze all of the news and price action across the markets.
Financial freedom is a journey
Sign up now and gain unfettered access to all of the quality content and powerful Scouting Reports that our Pro Members enjoy for 15-days absolutely free with no strings attached and let us show you what your trading has been missing.
Tackle Trading LLC (“Tackle Trading”) is providing this website and any related materials, including newsletters, blog posts, videos, social media postings and any other communications (collectively, the “Materials”) on an “as-is” basis. This means that although Tackle Trading strives to make the information accurate, thorough and current, neither Tackle Trading nor the author(s) of the Materials or the moderators guarantee or warrant the Materials or accept liability for any damage, loss or expense arising from the use of the Materials, whether based in tort, contract, or otherwise. Tackle Trading is providing the Materials for educational purposes only. We are not providing legal, accounting, or financial advisory services, and this is not a solicitation or recommendation to buy or sell any stocks, options, or other financial instruments or investments. Examples that address specific assets, stocks, options or other financial instrument transactions are for illustrative purposes only and are not intended to represent specific trades or transactions that we have conducted. In fact, for the purpose of illustration, we may use examples that are different from or contrary to transactions we have conducted or positions we hold. Furthermore, this website and any information or training herein are not intended as a solicitation for any future relationship, business or otherwise, between the users and the moderators. No express or implied warranties are being made with respect to these services and products. By using the Materials, each user agrees to indemnify and hold Tackle Trading harmless from all losses, expenses and costs, including reasonable attorneys’ fees, arising out of or resulting from user’s use of the Materials. In no event shall Tackle Trading or the author(s) or moderators be liable for any direct, special, consequential or incidental damages arising out of or related to the Materials. If this limitation on damages is not enforceable in some states, the total amount of Tackle Trading’s liability to the user or others shall not exceed the amount paid by the user for such Materials.
All investing and trading in the securities market involves a high degree of risk. Any decisions to place trades in the financial markets, including trading in stocks, options or other financial instruments, is a personal decision that should only be made after conducting thorough independent research, including a personal risk and financial assessment, and prior consultation with the user’s investment, legal, tax and accounting advisers, to determine whether such trading or investment is appropriate for that user.