Coronavirus Market Plunge: 1 Strategy to Profit Off Panic
Jerome Powell, the chairman of the Federal Reserve, is panicking.
The Fed cut interest rates by half a percentage point last Tuesday. This was a huge move considering its gradual cuts and hikes were just a quarter of a point.
That cut was a critical moment.
The stock market was just 10% off its all-time highs. Stocks were looking to recover after just posting one of the best single-day rallies ever.
But the emergency interest rate cut caused a U-turn for stocks — and huge volatility the rest of the week.
In today’s Bank It or Tank It, I’m sharing my thought process during the current market volatility. And where I see the S&P 500 Index going from here.
It’s important you understand what’s at stake for the broader market — and your portfolio.
Check out my latest video to get my insights on the coronavirus, what oil’s plunge means for you and an update to my outlook for the S&P 500.
Check it out here.
I’m not one to call for a recession. But this time feels different.
I know we all want a nice round top like we saw in 2007 and 2008. One that’s easy to predict and trade along the way.
I don’t think we got it this time.
I’m actually rooting for a quick rebound.
But each market top is not the same. We saw a classic euphoric rally, leading to a blow-off top.
The quick crash signified it was a false breakout, and stocks are trending lower.
And now, stocks may be on the cusp of a massive 50% drop as the U.S. economy falls into a recession, due to fears around the coronavirus.
But not all hope is lost.
As I mentioned in the video, we’ll continue to grab profits along the way. In fact, we already did during last week’s volatile market, with 50% gains on two put options and a double-digit gain from adding an inverse exchange-traded fund.
Our game plan going forward is to take profits when they come and cut losses quickly.
One strategy sets us up the best in a volatile market: my Pure Income service.
This is my favorite approach at the moment. And every investor needs to consider this trading strategy in the current market.
My colleague Matt Badiali put together a special presentation walking you through all of the details. You can check it out right here.
Chad Shoop, CMT
Editor, Pure Income
Investing has consumed my life since college. While double majoring in finance and economics at the University of North Carolina at Greensboro, I founded the university’s economics club, joined the finance club and participated in the Chartered Financial Analyst research competition to represent our school.