Market Report Jan 28 2021

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Market Report for Jan 28 2021

Avoid volatile periods by standing aside.

Market Trend:

Market YTD:
Russell 2000 +6.8% YTD
Nasdaq Composite +3.0% YTD
S&P 500 -0.1% YTD
Dow Jones Industrial Average -1.0% YTD

Market Volume:
NYSE Vol: 1.7 bln (A)
Nasdaq Vol: 10.1 bln (A)

New Swing Positions:

Another day of short squeezes as more hedge funds face losses against the amateur traders banding together.

A bearish day across the board as all indices ended deeply negative.

As has been already mentioned a few times on the weekly MaR webinars, we have been waiting for some form of reaction when the dumb money is involved and it looks like yesterday we got some. Huge selling volume, which might partly be for short position covering and partly to reduce risk but regardless of the reasoning, the volumes are big.

Unsurprisingly, all sectors ended in the red yesterday with communications being the worst.

AAPL had its best every quarter for iPhones as it reported earnings after the bell. TSLA and FB also reported yesterday.

What do we do now?
VIX has increased during Wednesday’s session so we should expect some more volatility in this market.

VIX Jan 28 2021

For growth positions, we can sit tight and ride out any drawdown in the market or maybe reduce position sizing. Personally, we might look to exit our swing positions and await new set-ups.

Standing on the sidelines is also a position, so waiting for new set ups and decreased volatility would probably be a smart move for swing and trend trades.

Sectors Jan 28 2021

Let’s go trade!