A gap up and run of more than 450 points and a 3-hour selloff taking back nearly 300 before the close is a test of traders patience and discipline. Yesterday was the 5th huge daily whipsaw in as many days as the wild news driven volatility continues. This is a market for very fast and very skilled day traders and institutional algorithmic computers. So what is swing trader or position trader to do?
As hard as it may be, we must be patient and remain disciplined to our rules to protect capital and wait for our edge to return. Waiting is painful for most traders, but it’s far less painful than watching your money and confidence disappear trying to fight the tape. Obviously, this is very dangerous price action and if you find yourself losing money consistently for goodness sake stop repeating the same mistake expecting a different result. Like the old saying goes, If you find yourself in a hole, Stop Digging!
On the Calendar
On the Earnings Calendar, we have 29 companies on the reporting today with ADBE as one of the most notable after the bell.
Action Plan
As I write the US Futures are fluctuating between a slightly bullish open to a slightly bearish open but with Jobless Claims and Import/Export numbers out at 8:30 AM anything is possible by the open. Honestly, I was a little surprise because only 6 hours before futures were up 110 points! Let’s hope it can retest the overnight high later today. We can’t seem to get past the big price swings even in the overnight session following a roller-coaster ride yesterday which saw a rally of more than 400 points but gave back nearly 300 in the last 3 hours of trading.
With such wild volatility,we remain a very challenging day traders market, and we sit on the edge of our seat waiting for the next news driven reversal to occur at any moment. We all know better days will eventually return but the patience to wait for them is very difficult. Protect your capital and guard your confidence because both can easily evaporate during such volatility. Trading is a marathon, not a sprint so slow down and wait for your edge.
Trade Wisely,
Doug
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