How to Approach the COVIDCrash Market
Stockscores Foundation for the week ending April 13, 2020
In this week's issue:
In This Week’s Issue:
- Upcoming Events – Free Webinars in April
- Stockscores Market Minutes Video – 8 Stocks to Consider from the Market Crash
- Stockscores Trader Training – How to Approach the CovidCrash Market
- Stockscores Feature Strategy – Check this week's video!
Upcoming Events – Free Webinars in April
Tue Apr 14 6pm PT – How to Invest in the Stock Market Profitably
I will walk you through process for managing your stock investment portfolio. During this webinar, you will see how he scans the market for opportunities, evaluates risk and reward potential and follows his holdings for exit signals.
Thurs Apr 16 6pm PT – How to Day Trade the Stock Market Profitably
I will take you through the components of running a profitable day trading business. During this webinar, you will learn the importance of trading well tested strategies, practicing good risk management and having a methodical process for finding and trading opportunities.
Sat Apr 18 9am PT – Overview of Stockscores Trader Training
I will explain the three trader training options being offered in May. Learn what these programs cover, who they are right for and what additional bonus training is included in May.
Click here to register
Stockscores Market Minutes – 8 Stocks to consider from the Market Crash
Market crashes bring emotional trading and emotional trading brings opportunity. This week, I highlight what I look for when buying stock market bargains and show you 8 stocks that I think have good potential for a recovery. Plus, I do my regular weekly market analysis and look at the day trade of the week on NEM.
Click here to watch this week’s Market Minutes
To get instant updates when I upload a new video, subscribe to the Stockscores YouTube Channel
Commentary of the Week – How to Approach the COVIDCrash Market
In my 30 years of trading, I have never seen a market like this one. I have been through numerous crashes, but none so swift as this. I am sure that most investors are feeling very uncertain about the market but I do believe that with the right approach, there is tremendous opportunity.
First, how is this market different from normal?
- Price volatility is extremely abnormal. This means that the price swings, up and down, for big, well established companies is something I have never seen before. For example, in two weeks, Boeing (BA) went up 80%, down 30%, then up 25%. Those are penny stock type moves.
- The number of stocks making big moves is very high. I am getting more trading signals than I have ever seen and that is a good thing, if you know how to take advantage of them.
- The market changes direction quickly. We have seen the market make gains of 500 Dow points in a few hours, only to give all those gains back in the next few hours. This can drive any person to pull their hair out in frustration.
- There is a lot of negative information in the media. If you are watching the news, you are likely to feel that the sky is falling and the future of the market is dark.
How can we use the characteristics to our advantage?
- Price volatility is good for short term traders. What is key is that you do not chase stocks that are moving in strong trends. You have to catch them when they are starting to move, when the short term, intraday trend is just getting started. Last week, we saw a good move to the upside that started on Monday. Buying stocks later in the week was risky because stocks had already gone up for a few days and that short, intraday trend for the overall market was running out of momentum.
- Trading is much less capital intensive. You can take positions in big, well established companies and enjoy good percentage returns with much less capital than normal because the price volatility is so high. Responsible risk management means you should be taking smaller positions than normal.
- You should be willing to take fast profits. I call this the Steve Miller approach to exiting because we want to take the money and run on the first sign of trend reversal. My top performing day trade pick today (BMRA) went up 15.9RR (reward for risk, take this number and multiply it by your risk tolerance to understand the profit potential) and then went down to only 3RR before bouncing back to now up 7RR. Great for the active trader but if you can not watch the market closely then you need to focus on longer term trading set ups.
- Don’t fall in love. We are not buying anything right now because we like the companies, we are simply taking advantage of the volatility. You must be willing to want to own a stock on day and then consider it toxic the next.
- If you want to buy for longer term holds, buy weakness, not chase strength. This means avoiding the Fear of Missing Out. If a stock you want to own is running away to the upside, let it go. There is a good chance you will be able to get it in a few days when it makes a pull back. Then, wait for the break of the pull back as the cue that it is going to try moving up again.
I think that I can help any investor or trader get through this crazy market simply because of my 30 years of experience. Here are a few ways that I can help:
- Watch my weekly Market Minutes video on YouTube. To find it, go to YouTube and search for Stockscores. Subscribe to my channel and click on the notifications bell so you will get an email when I upload a new video. It is a lot easier for me to explain concepts when I can show things visually so I am putting more up on video that in a written format.
- I have webinars next week that will give you some education on what to look for. You can register for those by going to Stockscores,com, click on the Trader Training menu and then Upcoming Events.
- For my Active Trader members of Stockscores, subscribe to Active Live. I talk you through each trading day while you watch my analysis screen for stocks triggering my strategy rules. This is more for day and swing traders.
If there is one other thing that I can say which will hopefully help is to remind everyone of what history teaches us. Stock market crashes create great opportunities. Every single one in history has lead to strong gains as the problems got solved. I believe this one will be no different, it is just a question of time.
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Check out this week's Market Minutes video for some trading ideas but also a run down of what to watch for. The market is moving so fast, you need to have an understanding of what I am looking for to really be able to take advantage of opportunities each day.