Panic has finally hit the markets. And it is pure panic this morning. SPY -2.5% QQQ -2.75% TLT +1.39% GLD +2.34% @CL -4% VIX.X +34.37%
This is what panic looks like. I cannot remember when I have seen Vix.x + almost 35% premarket. That is something you rarely see. On the bell curve, I would say we are on the outer edges right now for the VIX premarket.
This is all Coronavirus related. The news is not good. Matter of fact I doubt it could be worse this morning. The problem is the media has cried wolf so many times now, that they have no credibility.
So you have to find an independent news source to get your information. My suggestion is OANN, to stay somewhat up to date on accurate information on the virus. Myself, I have been as complacent as most, but I plan on getting up to speed on this in the next few days. Once I do I will give my thoughts on what is a logical discussion of what the facts are. But I doubt it will be until Wednesday or so.
I saw a number the other day where the U.S. gets over 95% of its prescription medications from China. That is a staggering number, how it relates to the Coronavirus I plan on figuring out.
So if you are in the market right now from Friday what do you do? Rule 1. When everyone else around you is in panic mode, that is the time to not panic. This is a hard and fast rule for many reasons. The primary one is there is no % in panic. I always like to make the analogy to the private pilot who is flying a small plane. And then because of some screwups finds he put the plane into a full spin.
As an instrument-rated pilot, I know that pulling out of a full spin in a small plan is one of the toughest maneuvers you can do. But as “Taylor” said in his many books on flying, ” Considering the alternatives, you best do everything you can to pull out of the spin”.
This applies to life in general. When you find yourself in panic mode, you have to get a grip to have a chance. Clear thinking with a logical mind beats panic every day of the week. That is one of Rick’J’s Rules:)
Rule 2. Do not sell on the open. You will not get a good fill and its time to wait until things settle down. If you follow good position sizing techniques you should not have a problem.
Rule 3. Look for opportunities. Panic creates opportunity. Humans tend to overreact. I have found the best opportunities are found at the end of the session. You want to avoid being on the wrong side of a trend day down.
This is pretty simplistic but it is a good start. If you avoid panic you are a step ahead of most.
I have been doing more and more income trading at the moment as I have found the markets too elevated to get over-leveraged to the long side.
I like to find some short put sales on Thursday with a 10 to 20% breakeven threshold for a quick two-day profit. When learning this technique I started out placing these trades on the first day of the week.
I learned there are enough opportunities for this trade on a Thursday for Friday expiring options, there is no reason to do Monday trades.
I still have several swing trades on, but I am obsessive about position sizing. I have no worries this morning. I will be looking for some opportunities later in the day.
If you want an unbiased analysis of the markets each weekend I recommend:
In this issue, Jeff talks about the Coronavirus, Internet Crime, his good, bad and the ugly column, the week ahead, and the part I especially like “Quant Corner and Risk Analysis”.
Note, he puts the odds of a recession in the next 9 months at .41%. Two other indicators state no chance of a recession.
There is much more to the newsletter but its the best free investing newsletter on the internet today.
One other very good newsletter is :
What both of these have in common are they are devoid of politics. They are a quantitative view of the markets, with some opinions thrown in that tend to be logical.
Read these each week, and stay away from the mainstream media fear-mongering. As an investor, you cannot get caught up in the day to day hysteria. It will cost you money.
One other decent newsletter comes out each morning is:
It is a brief rundown of news heading into the opening of the markets. And again is non-political.
Throw an OANN feed onto your desktop and you will be all set for the day. OANN tends to be on the conservative side of things, but it is factually based. You will not find the hysteria you get in the liberal media.
You can find OANN by subscribing at Facebook, or Klowdtv.com has its feed also.
The political odds have not changed much since my last post. You can find the odds and my comments in the political odds section of the site.
On the sports betting side of this site, I am working on an article describing the 4 seasons of College Basketball betting.
Each season has different considerations, and as I am a rule-based handicapper they all have different rules before I make a wager.
We are in Season 2 of this years, College Hoops. Season 3 will start with conference championships, and then Season 4 is post-season tournaments.
March Madness is almost here, and then we move into the MLB Season.
Preseason MLB has started. Over the last four years, I have had a special for subscribers: If I do not have a winning season you get 50% of your subscription fee back!
I started this 4 years ago. Since I have started it I have not had to refund a penny:) This special will be in play this season also. All it requires is you be a subscriber from the first week of the MLB season until the last regular-season game.
If you are considering subscribing, heading into March Madness and MLB is a perfect time! Go to the PayPal drop-down menu on the web site and subscribe.
As an additional Subscriber benefit, I post most of my stock trades on Viber to those that want them for free.
Good Luck Today
RickJ’s Handicapping Picks