Will the S&P 500 collapse
2022.12.25 01:23
When someone yelled “fire!” on Thursday morning, the fell more than 100 points. and desperate traders attempted to escape by leaping over each other.
What was the impetus for Thursday’s selling? Simple, there was none. Impulsive traders scared by their own shadows and the herd following them out the door caused this panic.
However, this is not surprising. This was the second and final trading session before the Christmas break, and institutional investors have already taken up residence in their vacation homes.
Because there was no one to rein in impulsive retail traders who were given too much responsibility, they made poor decisions like irresponsible teenagers who were given too much responsibility.
Fortunate for us, these retail brokers have little records and immediately run out of things to sell. The supply ran out early in the afternoon, and the index rose 60 points from those oversold levels to easily reclaim support at 3,800.
With respect to how I exchanged this, I came into Thursday standing firm on lengthy footings I purchased before in the week. I was fortunate enough to already have a substantial profit cushion and to move my stops above my entry points on Wednesday, making this trade low-risk.
I wanted the rally to continue on Wednesday, but it didn’t, and I was kicked out at my trailing stops. To the critics, that makes me wrong, yet assuming my mix-ups end in humbly productive exchanges, I can live with that.
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I was also able to repurchase positions below 3,800 when the market rebounded a few hours after I pulled the plug at my stops above 3,800 support.
Therefore, not only was I able to exit my previous trade with a small profit, but I was also able to enter at even better prices. I don’t mind being wrong if that’s what it looks like.
Regarding the next phase, a significant number of impulsive traders exited on Thursday morning and no longer pose a threat to the market. Since I liked the bounce on Thursday afternoon, I am already a buyer.
I will exit at my stops and try again next week if the selling resumes on Friday. And if I’m lucky, prices will fall even further on Friday, allowing me to purchase items at even lower prices.
