Markets tanked on a short trading day last Friday, but it shouldn’t have been a complete surprise. Keith Harwood had drawn our attention to a key indicator that was signaling a potential drop. (check out the video chat here) Just a few days later it flashed another, more serious, alert warning of a imminent pullback that also reminded us of what this signal really means (read it here). By last Friday it was clear these signals were valid and it doesn’t look like we’ve seen the end of it. Take a look at the chart below:
It looks like the VIX was trying to get in on the space race as it launched through the atmosphere. In May and September, when the VIX took this kind of leap, we saw pullbacks of 5% or more in the S&P.
Buckle up and look at your short strategies. With the frenzy starting around the Omnicron variant, this could be a drawn out event. There is good news, though. The same place we turned to to get our heads up this drop was on its way also provides some really good tips on how to use this kind of move to your advantage.
Keith Harwood’s Market Maker Cheat Sheet is full of tips on how to play this move like a floor trader and make it give you the biggest potential win. Grab a copy here and get the other tips he offers as well.
Keep learning and trade wisely,
Market Wealth Daily