Thursday was a good session for the S&P 500 with the index adding 0.4% and pushing back near record highs.
But that was then and this is now. In after-hours trade, the indexes are tumbling on continued Asian weakness and U.S. futures down more than half a percent.
Is this finally the start of the long-predicted stock crash? Bears are definitely dreaming about that tonight.
But if bears have been wrong all year, what are the chances they finally get it right this time? Ummmm, yeah…..
While there is an entire night for this situation to develop, I don’t put a lot of weight in overnight futures. This is an incredibly thin market and easily swayed by small and impulsive night owls. Big money trades during the day and they couldn’t care less about what a bunch of guys in their pajamas think.
Occasionally other parts of the world lead our market, but those episodes are few and far between. Our current bull market is fueled by a huge resurgence in the U.S. economy and what’s going on in the rest of the world doesn’t matter. In fact, things are so good here foreign investors are flooding into our markets because this is where the party is happening.
No doubt Asia and Europe still have their problems, but they are not a concern for U.S. investors. If these weak futures cause our indexes to gap lower Friday morning, that gives us an excellent entry point. Wait for the early bounce and buy with a stop under those initial lows. This is an easy, low-risk trade. If the selling resumes, no big deal, we get out and buy the next bounce.
HOOD got slammed on its first day of trading, but that usually happens to most over-hyped IPOs. Expect the selling to continue for a few weeks and even months. But this will eventually bottom like it always does. And that is when investors who believe in this stock should be taking advantage of those discounts. No doubt a good trade in this stock is coming, we just need to be patient and wait for it to come to us.
If you find these posts useful, please return the favor by liking and sharing them!
Sign up for FREE Email Alerts to get profitable insights like these delivered to your inbox every evening.
What’s a good trade worth to you?
How about avoiding a loss?
For less than $1/day, receive actionable analysis and a trading plan every day during market hours
Follow Jani on Twitter @crackedmarket