Traders,

Wednesday’s rally had all the makings of a face-ripper. Indeed, it appeared to be the beginning of a much-needed snapback rally. Stocks were desperately oversold. The VIX had spiked beyond 32. Both the dollar and 10-year yield staged sharp bearish reversals, giving the all-clear signal. What started as a humble morning bounce grew into a monster green candle that held its gains into the close.

Bears fled.

Bulls rejoiced.

And then, this morning, it all fell apart. Not only did we not get any upside followthrough, stocks gapped down hard at the open, and within a few minutes, all of yesterday’s gains disappeared. A rally that was two weeks in the making took all of 20 minutes to unravel.

What just happened over the past two trading sessions, nay, one trading session and 20 minutes of the next, is a microcosm of bear market treachery. It’s why this environment is so frustrating for traders relying on their short-term read to place trades.

As if you needed it, this is your friendly reminder to exercise restraint, be cautious, and, above all, heed your risk management principles.

Video Of The Day: Jedi Options: Stock Repair Strategy › How to manage a bad stock trade using options

In today’s Jedi Options, Coach Tyler explains how to manage a bad #stocktrade without further increasing cost and risk, and also reducing cost-basis using what is called a stock repair strategy using #options.

Chart of the Day: S&P 500 ($SPY) 5-minute chart

Treachery at its finest.

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.

Cashflow Club 8:30 PM EST

Held every Thursday before Friday’s option contract expirations, this show helps you perfect your favorite cashflow strategies.

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.

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