C A S H     is     K I N G

Realities of a trader

1. Losing money makes us feel inadequate.

2. Making money (but never enough) makes us feel inadequate.

3. Being on the sidelines makes us feel inadequate.

A purpose of the market is to make us feel inadequate.

Welcome to the life I've lived for 45 years

By. Peter Brandt (Trader of classical charting principles since 1980)

These are very difficult times in the market.  I have been through the market crash of 1987 as well as 2000 dot com bubble and  finally the 2008/2009 real estate market bubble.  It's always a gut wrenching experience.  It feels like there is never an end in sight.  You experience portfolio erosion and worst of all your confidence as well.  I have not witnessed the devastation of the  $SPY  (down -32%) and  $QQQ (down -29%) within 4 weeks from an all time high attained on February 19th.  There is no end in sight and the selling by the institutions (hedge funds, pension funds, mutual funds) is relentless.  This drop into the bear market territory has been fast and furious.  There is sheer panic in the market.  As I have mentioned in some of my posts, you might as well throw out all your books on fundamental, technical and value investing out the door with sort of carnage in the market.

I have my Growth Stock trading process in place and I often mention the 50 day sma(simple moving average).  When either of the two indexes - $SPY (general market performance) and/or the $QQQ (growth stock performance) trade below or close at that level, it's time to get defensive immediately.  Utilizing 34 day ema (exponential moving average) for individual stock for scaling down the position and raising  CASH  is also a good signal to follow.  CASH  should be considered as a position too.  It's the ammunition in your portfolio to deploy when the market resumes it's uptrend.

February 25th, both of the above 2 indexes were trading below the 50 day sma.  If one had gotten out of the market at that point, one would have suffered just a  -5%  loss and not a depressing  -29% loss.  CASH  would have been preserved and the portfolio would not have suffered such a depressing erosion.  If this institutional selling continues this week, it's quite possible these two indexes could drop down another  -11%.  Next support level for  $SPY  is at around 210.  It's a wait and see situation.  Allow the market to tell you when to start nibbling and start deploying your  CASH  back in the market.  In the mean time, stay engaged with the markets and continue to build your stock watch list.

Strategies   for   the   coming   Week

We are all going through some very difficult times right now in the market.  Lot of us are scared and anxious.  We have an unknown component in the market as well as in our personal lives that we have not faced before.  It feels like the sky is falling.  Our older generations had faced the 1929 depression and the second world war.  My generation dealt with the lines at the gas station from the Arab oil embargo in the 70's and high unemployment and inflation rates in the 80's.  It's hard to believe that we had mortgage rates of  12%   at that time.  Inflation was so high that we had  a  "Wage and Price"  controls in our  FREE capitalistic society.  We did survive the terrorist attacks on 9/11.  This pandemic too will come to pass and we will all come out stronger and better because of that.  Market will always be there for us.  Few things I suggest we all do this coming week is: 

• Stay calm and don't panic.  It's not the end of the world.
• Don't focus too much attention on all the postings you get in social media.  It will depress you.  It's not important to know everything in the market or every details of the pandemic storm.
• Take the time to read some good books and enjoy the company of your family and your pets.
• Watch some movies and educational TV shows to sharpen your knowledge.
• Go out for a walk in your neighbourhood with your children and loved ones.  Being out in the sun and taking in the sights and sounds of spring will rejuvenate you.
• Slow down and smell the roses.  Live in the moment because that's all we have.
• Pursue some of your hobbies.
• Take an online course and watch some utube videos to sharpen your trading skills.
• Universe is teaching us all a very important lesson right now.
• Don't hoard your knowledge or your expertise.  Share it.

https://www.realvision.com/shows/the-interview/videos/the-psychology-of-high-performers

The Interview · Featuring Dr. Gio Valiante

Published on: March 2nd, 2020 • Duration: 44 minutes

Watch this interview by Real Vision with Dr. Gio Valiante

"Psychology of High Performers"

It's a 44 minute interview.  I have watched it several times already and have it archived in my library. 

Enjoy 

Happy Trading!

Amin