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Tackle Today: Correction Post Mortem

September 27, 2021

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What did you learn?


With stock indexes on their way to fully recovering from the recent pullback, it’s worth taking time to analyze how you fared. This is an exercise I engage in following every major correction. And, while the S&P 500 dropping 5% doesn’t exactly qualify as a “correction,” it was the largest drawdown seen this year. Thus, based on recent history, it was substantial. Besides, there were loads of stocks that fell a lot further.

Here are the questions I consider each time I perform a post mortem.

  1. First, how did my trading systems fare?
  2. Second, if I suffered losses, were they within my risk limits?
  3. Third, was I whipped out of positions? If so, was this an outlier, or am I consistently getting knocked out seemingly at the wrong time?
  4. Fourth, is there anything I can change about my trading systems – any rules I can tweak – that might improve my performance moving forward?

It’s impossible to dodge losers. I don’t fault anyone for bailing on some trades during the past two weeks of volatility. Capital preservation is paramount, and if the severity of the slide necessitated hitting stop losses, then so be it. If you’re effective at minimizing losses, the eventual winners will push you back into the green.

One more point. Sample size matters. I would never re-tool my trading systems based on the performance during a single correction. But, over time, as you analyze and journal your trading through multiple bearish episodes, you may discover certain adjustments that will elevate your performance.


Chart of the Day

Airlines Take Off

Source: @bespokeinvest

Reopening plays made a comeback to our Scouting Reports over the weekend. One industry on the mend is airlines. Today’s chart shows the Global Jets ETF (JETS) breaking above weekly resistance for the first time in months. Also, note the drumbeat of accumulation in the volume indicator confirming institutions are entering the fray.

Video of the day

Coach Frank’s Charts

Watch this clip from Friday’s Halftime Report where the coaches analyze Frank’s charts and discuss their potential trading setups on stocks like Horizon Therapeutics, Applied Materials, Intercontinental Exchange, Anaplan, TreeHouse Foods, Walgreens, and Corteva.

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.

Weekend Reports

Watch the Stock, Options, Commodity, and Forex Reports to help you prepare for the week.

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