Opportunity Is Knocking

Let’s paint the picture.

Going through our after-market scans, it’s astonishing to see market gains continually get completely wiped out. Prices are literally going straight down; non-stop. Demand zones are non-existent with price cutting through as if they were never there. The amount of opportunity that is being created isn’t something that comes along too often.

This was the scenario as the markets began to fall off a cliff when COVID hit Main Street. The Street literally couldn’t unload their shares fast enough.

There were strong fundamentally sound companies that got destroyed due to the coronavirus. Of course, no one could have ever predicted when the bloodbath was going to stop; but once it does, you already knew it was on!

So many heavy hitters got caught up in their egos and began throwing good money after bad, which inevitably ended up getting them deeper in the red.

For some reason, Smart Money have a hard time admitting they made bad trade decisions. So instead, many of them continue to average down and/or hedge their positions. The problem was, all sectors were bleeding (aside from some Consumer Staples), the stability of the market as a whole, was extremely uncertain – so even hedges weren’t working. The stubborn fund managers got destroyed.

Time would have been much better spent building a plan for the second half of the year or until most of the dust had settled, as the new deeply discounted prices would certainly not last forever.

Now, the beauty about earnings season, is that it exposes both the weak and strong. It brings the spotlight onto the strongest of the strong and more times than not, shareholders get rewarded nicely. On the flipside, those companies that didn’t perform as the Street had expected them to, end up with a bit of a share price reality check that comes from a sizeable pre-market gap down.

The coronavirus had crippled so many industries and it ended up taking some time before things got back to business as usual; many didn’t even make it back. Some share prices got beaten down so much, just about all institutional investors unloaded everything they had onto the market and many companies ended up trading in the ‘zombie zone’ – basically never moving from the penny stock level.

Companies were bleeding cash trying to stay afloat with the lack of demand; but this is where savvy management reign supreme.

Those companies that were burning cash on a daily, struggling to turn a profit, most likely become collateral damage. With all sectors deeply bleeding, only the strong survived. And this was music to the ears of the patient. The patient traders. The patient investors. The market participants with discipline to wait for their pitch.

Cash is a position and at times, the very best position. Why? Because it allows you the opportunity to go on the offense when the irons hot! When that perfect pitch gets thrown in your zone, those that were ready had a feast.

We like to say, keep it simple. Let the Street show their hand and enjoy the ride of their waves. Whether that means to continue shorting lower highs; as prices trend much lower than expected or buying up all the dips in a clear uptrend. The market has a very nice way o rewarding the patient traders.

But don’t forget one thing, once you think, “it can’t go any lower”, boom, it can drop another 10 points in a heartbeat.

Opportunity is always knocking; you just need to be patient and ready when it does.

About The Street Trading

Consistently Profitable.

That's The Goal.

Start with a crystal-clear vision of where you’re headed, then effectively lay the foundation to reach that goal through a systematic process.

That's The Street Trading.

We provide a straight-forward, no-nonsense results-driven trading education, that cuts through the noise to teach new and existing traders on how the stock market truly operates.

Our attention is focused on building actionable knowledge about the markets from the ground up. We construct a foundation of the fundamentals behind consistently profitable trading that you can build a career on. Take the guess work out of trading and ultimately understand what moves the market to finally flow with the Street and Trade with Clarity.

Day Trading | Swing Trading | Position Trading - It all comes down to managing risk and market psychology.

If you’re interested in learning more about what we have to offer you as a trader, come check us out at https://www.thestreettrading.com/

We look forward to joining you on your trading journey!