EarningsBeats.com Digest for June 15, 2020
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Dear Digest Subscriber,
Join Tom Bowley today at 4:30 PM eastern:
"Scanning Strategies Against ChartLists"
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Considering A Defensive Play As Volatility Rises
We saw the most selling we've seen in weeks last week, especially in the areas that were weak back in March and April. Small caps ($SML) fell a staggering 9.66%, losing nearly all of its gains from the week prior. The Volatility Index ($VIX) jumped 47% last week, moving above 40 on Thursday, before settling down a bit on Friday. Personally, I try to avoid trading as much as possible when the VIX is high (above 20) and rising. It ended
last week just above 36 after closing close to 41 on Thursday. One way to trade, if you must, is to consider less volatile areas of the market that tend to hold up better during fearful times. One such stock would be ConAgra Brands (CAG), a food products company:
The idea here is that it needs to hold onto recent price support. Since it's trading just above that level, a fairly tight stop could be kept in place. If I trade a volatile market, I only want to buy when I'm very close to a support level so I can manage my risk. Just realize that when the VIX is in the 30s, 40s or higher, tons of whipsaw action can take place and trading successes on the long side tend to diminish. One minute you'll
get stopped out, and the next minute that same stock rises quickly. It takes an emotional toll, so be prepared for that if you try to trade a highly volatile market.
Happy trading!
Tom Bowley
Chief Market Strategist
EarningsBeats.com
Better Timing. Better Trades.
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