Markets gone wild - Mike Hogan

Markets gone wild! That’s an understatement given today’s price action. Equities cratered at the open only to rally and wipe out losses!

Last week I wrote a post about fear trades. Well, today checked off two of the three conditions.

So, what does that mean going forward?

Indeed, today many weak hands were flushed from the market. Leveraged funds have sold, and shorts still need to cover. This tells me there is some room for equities to run to the upside. But how much?

On the flip side, we have Central Banks shifting to tightening policies to combat inflation. This leave the door open to the risk of policy error. This fact needs to be respected.

In light of this fact, I thought a crash course in risk management might be helpful. For instance, the following bullet list is a sound place to start.

Be realistic, no bull market lasts forever.
Seek skewed risk/reward trades and opportunities.
Cut your losses and let profits run.
Reduce risk when volatility rises.

This list is simple to understand and concise. Sometimes, you know, the markets gone wild!

Conclusion

To be sure, risk management cuts way deeper than this list. However, to invest or trade without deploying a risk management is a recipe for risk of ruin. On the positive side, today’s setup with the VIX up and a capitulated market, we have a potential skewed risk/reward trade. Namely a long equity ETF trade opportunity.

Remember trade and invest on your own terms and manage your risk prudently. Only you can do this.

Happy Trading!

–

My definition of a fear trade post –>

–

DISCLAIMER: Content provided in this document is for your informational and entertainment purposes only. This document is not a solicitation for an investment, is not comprehensive, and should not for the basis for any investment decision. This document is not an offer to sell or a solicitation of an offer to buy any securities, commodities, or financial instruments, and my not be relied upon in connection with the purchase and sale of any instruments or interests in investment vehicles. This document should not replace professional investment advice based upon your particular situation. Duties are not assumed, intended or created by this document.

Mikehoganonline (“MHO”) strongly suggests that you obtain independent advice in relation to any investment, and with respect to any financial, legal, tax, accounting or regulatory issues resulting form such an investment. In addition, because this document is only a high-level summary: it does not contain all materials terms pertinent to an investment decision. This document should not form the basis for any investment decision. Information contained in this document has been obtained from sources that MHO believes to be reliable, however MHO make no assurance or guarantee that such information is true and/or accurate, and MHO expressly disclaims liability arising form the use of information contained herein.

This document contains statements of opinion. These statements of opinion include, but are not limited to, MHO’s analysis and views with respect to: digital assets, projected inflation, macroeconomic policy, the market adoption of digital assets (including Bitcoin and Ethereum, and Blockchain), technical and fundamental analysis, financial planning, and the market in general. Statements of opinion herein have been formulated using MHO’s experience, research, and/or analysis, however, such statements also contain elements of subjectivity and are often subjective in nature. In addition, when conducting the analyses on which it bases statements of opinion, MHO has incorporated assumptions, which in some cases may prove to be inaccurate in the future, including in certain material aspects. These analyses and opinions contained herein may be based on assumptions that if altered can change the analyses or opinions expressed. Nothing in this documents represents a guarantee of any future outcome, or any representation or warranty as to future performance of any financial instruments, credit, currency rate, digital currency or other market or economic measure. Information provided reflects MHO’s views as of the date of this document and are subject to change without notice. MHO is under no obligation to update this document, notify any recipients, or re-publish the content contained herein in the event that nay factual assertions, assumptions, forward-looking statements, or opinions are subsequently shown to be inaccurate.