Market On Open - Wednesday 6 March

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CRAAAASHHH …. Oh … Waiddaminute …

by Alex King

Friday was bear BBQ. Tuesday, bulls were toast. Never a dull moment. Today Chairman Powell is speaking, always time to break out the popcorn and sit back to see what it is that market bigs intend to do about it. There are many ways to play such things but personally I have two methods, depending on how busy I am and how much yogic calm I can muster on that particular day.

  1. If busy and/or lacking in calm … and when I say calm I mean complete inner tranquility with all limbic screen reaction times set to about three days … I do nothing. Just let the day play out and see what happens at the close. Then decide whether to continue to do nothing (often the best course of action, more often than people think, in fact) or to add shorts or add longs or what.
  2. If not busy and I can stare at the screen with the above level of inner calm - I may trade the swings short term using short-term charts and Fibonacci levels. This can be very profitable but at the risk of elevated dopamine levels, always dangerous. Generally speaking if in a bear market and Powell is speaking and the indices move up, time to take gains on longs and/or add shorts. If in a bull market and Powell is speaking and the indices move down, time to sell shorts or overhedge long. Personally I try to keep the long-term dominant trend direction in mind and trade that way during the see-saw you often see take place.

Most times I choose option (1).

Yesterday, markets dumped a little across the board but were all apparently rescued by an earnings print from a sub-$100bn EV company called Crowdstrike that nobody normal has heard of. Which rather makes me think that in fact it wasn’t CRWD earnings that saved the day but instead that’s just what bigs were doing anyway - selling on the day and then buying overnight. Which is a fine way to create gains from nowhere if you have the account size to do it.

At the time of writing, markets are up. Below we dive into our usual charts where we walk through the S&P500, the Dow, the Russell 2000, the Nasdaq-100, and then a clutch of specialist ETFs, being SOXL (semiconductor), FNGU (tech majors) and TECL (also tech majors). Before then let me update you on my own index and sector ETF positioning, and plans for future trades.

Index Trading Update