Signals & Trading Plan for Tuesday 3/10/20

Navigating The Crash
We won’t make you cry by discussing the stock market crash that’s happening right now.  But let’s discuss what might be coming around the corner.

Last night we outlined the super bearish scenario that can take $SPX down to the low of 2016.   That’s $SPX reaching around 1810 potentially.  This scenario may not happen right away, but there is now a rising probability of it happening, and it can unfold by end of this year.

This is extremely disheartening, and not just because it may drag down our 401k accounts for a long time.   Jobs, livelihood and lives will be impacted, in a big way. That’s the scariest part.

So how do we provide trading advice when it’s raining black swans?   

The truth is we cannot.  But we can share with you the lessons we learned trading through 2008-2009 crash.  Maybe you can gain some insights and benefit from our experience.

One of the lessons we learned is that in fast moving time like this, it’s best not to try to trade every move in the market.  Whipsaw is everywhere.   We may all be better off just chilling for a day or two and see how events unfold.

We also learned not to chase the small bounce.  The potential risk:reward ratio is not very favorable.  We found that it’s better to wait for the really major support zones to be reached before betting on a substantial bounce.

Finally, remember that we are in a Down Trend.   So instead of obsessing about buying the dip, we should be thinking about selling the rip.

Subscribe to read the full article, and get access to our daily trading plans immediately.  The full article covers:

Long-term Support & Resistance Levels

• For $SPX $NDX $RUT
  

Market Internal Indicators

• Volatility
  
• Compounded fear
  
• Market breadth
  
• Level of bullishness
  
• Overbought / oversold levels
  
• Bullish / bearish divergence
  

Market internal indicators give us a daily glimpse into the short-term direction of the market.

Trading Plan

• Stock market strategy for long-term portfolio
  
• High-probability setups for short-term trades
  

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