Today, I want to focus on the coronavirus crisis and the stock market crash.
Lately, I’m getting TONS of questions and messages from people asking what to do. So I want to share my thoughts about what’s happening. I’m isolating in my home on the Lanzarote Island, Canaries. Luckily I did not get sick.
By now you probably know that pretty much the entire sports world shut down.
And it’s not just sports. Entire world is slowly closing borders down. Even free movement across European Union is being denied.
Across the pond, it’s getting worse…
How Coronavirus Is Shutting Down Europe
I don’t know if you’ve seen what’s happening in Europe. Europe is a tough place to control the coronavirus outbreak. Everyone’s packed so closely together, and there’s a large elderly population.
Europe is shutting down…
In Italy, millions of people are on lockdown. Only grocery stores and pharmacies are open. Belgium shut down schools, bars, and restaurants. France shut down borders, schools, universities, and daycare centers. In Spain, massacre...
Chancellor Angela Merkel told her fellow Germans up to 70% of the population may become infected…
Which is why President Trump announced a travel ban on flights from Europe. But you have to remember this isn’t just about Europe…
Virus in America
The coronavirus is already in America. There are people you know who probably already have it. But still a lot of people out there aren’t taking this seriously. This isn’t something to take lightly folks.
Too many people say, “Oh, it’s nothing. I’ll just go on with my life.” A lot of people who have the coronavirus don’t know they have it. Plus, there’s a backlog with tests. A lot of people who have it are unknowingly spreading it.
As I write, situation gets more and more volatile.
Is Coronavirus Really That Bad?
If you do get COVID-19, the good news is the fatality rate is very low — especially if you’re in good health. But if you’re elderly or you have pre-existing health conditions… it gets tricky.
Remember, the 1918 Spanish Flu pandemic killed between 20 and 100 million people. The discrepancy is because the numbers are estimates. Many countries didn’t keep centralized health records at that time.
The Asian Flu pandemic in 1957 had worldwide deaths of between one and four million people. (Again, the numbers are estimates and vary depending on the source.) That number includes roughly 70,000 to 100,000 people in the U.S.
I don’t know if it’ll be that bad as we have modern medicine. But the 1957 pandemic seems to be very similar to what’s happening now.
How Long Will This Last?
I’ll let the virologists make those kinds of predictions, I'm not a doctor. Whether it’s a few days, a few weeks, or a few months depends on how much the virus spreads. It’s still early days if you look at the numbers.
But I can tell you one thing…
As a student of history, I’ve been saying for weeks now that this will have a huge impact on the world's economy. So it was only a matter of time before…
The Coronavirus Crashed the Stock Market
The stock market is crashing because people got cocky. We were at all-time highs, and frankly, people thought nothing could bring the market down.
Then we got the virus. Add to that the oil price war between Saudi Arabia and Russia… and that was it. It was a one-two punch that brought the stock market down. What has started as medical emergency turned into slowly digested financial crisis; and that mainly because Fed and other central banks run out of toilet paper - threw money at markets without the most important fiscal policy in place (exactly how we gonna fight this virus). Investors where looking for reassurance and got fuck all.
And that's the thing, it shows how weak and pathetic populist agenda and administration is.
How 2020 Is Different From 2008
This crash isn’t like the financial crisis. That was based on too much leverage in the mortgage market. It turned into an international banking crisis. So fundamentally, this is different. And it’s not really like 1987 or even the great crash of 1929.
How Scary Is the Coronavirus Crash?
I know both the pandemic and the market crash are scary. Especially the pandemic because it’s spreading so fast. It’s the number-one thing we need to fix.
So please don’t treat this like it’s nothing. That’s how too many people get it and then spread it to other people. You don’t want to get this and spread it to other people who then spread it to more people. That’s when it gets really scary.
The stock market crash is also scary. You have to think about what you can do to get through this.
Good News Bad News
After considerable amount of time, it will be over. That’s the good news. The bad news is… you have to get through it right now. It’s important we talk about this.
If you looking to invest in SP500 (as example), watch price action forming one of the letters L U V (on daily chart).
The State of the Market Crash Address
Make the best of the next few weeks. I know there are a lot of negatives, but there’s a flip side to this.
Again, we don’t know how low the stock market will go. And we don’t know how long this will last. But it will come to an end. In many ways, the crash is a good thing.
I don’t want anyone to go bankrupt or people to lose jobs. But I do appreciate the long-term benefit to the market. Plus, there’s an opportunity to learn. And I love volatility. And this market is volatile! President Trump declared a national emergency. When he paraded a series of big-biz CEOs in front of the cameras, the stock market surged.
The day after the worst day since 2008 became the best day since 2008. In less than half an hour the Dow spiked 1,443 points. The Dow, Nasdaq, and S&P 500 charts look like a penny stock chart.
All this volatility creates… the opportunities.
Massive Trading Opportunities
There are still hot stocks or forex pairs. There are SO many trading opportunities — if you’re educated and prepared.
For example, last week's where one of the worst in stock market history. I made a safe and low-risk £6,470. And I’ve been averaging roughly £1,000 per day in profits the past three weeks.
It’s not rocket science. But you have to know where and how to find it …
The Best Opportunities
One of the big problems with the coronavirus pandemic is people not taking it seriously. Our political leaders didn’t take it seriously in the beginning. Now reality is sinking in.
But coronavirus plays have been ahead of the game. The past few weeks we’ve seen spikes and full-on supernovas in coronavirus stocks or forex pairs. Which stocks or pairs? Here are some examples…
Potential coronavirus-testing stocks
Forex symbols like AUD, CAD, NZD, JPY or EURO
And it’s not over. In the coming weeks, these symbols will keep going up and down.
I’m SO impressed with my readers taking advantage of the opportunities when they see them. These guys are making upward of £5,000 or £10,000 in a week.
[Just remember, these are not typical results. My readers and I put in the time and dedication and have exceptional skills and knowledge. Most traders — 90% — lose money. Always remember trading is risky. Never risk more than you can afford.]
The Economy Will Bounce Back
It’s not a question of if… it’s a question of when. As a trader, the more the stock market crashes, the greater the dip-buying opportunities. Those prepared are riding the volatility.
Just remember to be safe and take this pandemic seriously. People keep saying, “Stop fear-mongering.” Sorry — that’s BS. In times like these…
A Little Fear Is Good
My prayers go out to everyone who has coronavirus, their families, and to the entire world. I want this to come to an end as fast as possible. And I hope we all do the right things to end it fast.
But I want to address the apathy. Remember, it’s not about looking good. It’s about staying safe. I think we need more fear right now to make that happen.
To the haters laughing at people for stocking up on toilet paper and water … Seriously? If that’s the extent of our fear, we’re not doing enough.
Washing your hands more often and seeing fewer people — that’s not fear. That’s common sense. If it takes fear to get you to behave differently until this passes over… I think that’s a good thing.
The Virus Is the Enemy
Don’t turn on each other. This is NOT the time to make fun of people for being safe. It’s a time to come together and do the right thing. Each and every one of us.
Here’s what you can do right now…
Try to limit the number of people you see. Limit your travel. (I love to travel, but I’m limiting it for the next few weeks.) Wash your hands often and thoroughly. Use masks if you want. (Even though they won’t necessarily protect you.) Stay indoors if possible.
And study history…
I’m basically a glorified history teacher. I’m professor of math, and I’m not the smartest guy in the world. But I study history. History teaches me to fear this pandemic AND it teaches me that…
Stock Market Volatility Is Your Ally
If… that’s a BIG IF… you’re prepared. If you’re a trader and you’re prepared, take advantage of the volatility and trade opportunities. If you haven’t prepared ahead of time, study now.
My Thoughts Are With You
Stay safe out there. Right now there are no clear answers. We don’t know how to prevent infection from the coronavirus except the standard hygiene recommendations. There’s no vaccine and it does potentially kill.
Important Notice: I Don’t Manage Other People’s Money Anymore
I’m a teacher first. I won’t place trades or invest for you. I don’t manage other people’s money or offer investments. EVER - ANYMORE
If someone promises you an overnight fortune — beware! It doesn’t matter if it’s crypto, options, or any other investing/trading vehicle. There are scammers out there promising you could double your money in 24 hours with no risk.
You can never double your money with no risk. There’s always risk.
With the strategies I teach, you can double your money… but there’s always risk. And very rarely do I make 100% on a play. Most of the time I make 5%–10%. For me, a home run is usually 20%–30%. The key is learning how NOT to take big risks and risk big losses.
Also, I will never reach out to you through direct or private messaging to ask for money. Or to offer you an investment opportunity.
If you’re contacted by someone claiming to be me — please contact my team on firstname.lastname@example.org.
Most importantly, stay safe. I teach strategies that you can use, over time, to build a small account. But it takes hard work and dedication. There’s no such thing as overnight success in the stock market.
How to Avoid Scammers
Education is the best defense against scammers. You’ll never be able to stop them all or weed them out. It’s a lost cause to try. So education is key. Know what scams look like and question everything.
Whatever you do, never send bitcoin or money to anybody who offers something too good to be true. If it seems too good to be true, it is.
Now, let’s check out questions from students.
“Dom, a lot of people are worried about their retirement portfolios. What should we learn from this crazy market and the coronavirus lockdown?”
You have to understand that the economy and stocks move in waves. You can only have an up wave for so long. What follows the up wave? An inevitable down wave. That involves overall economies on a global scale and individual companies, too. That brings up the question of…
"Timing the Market"
I do think that you can time the market. Not every day and it’s not a perfect science. I’ve been too conservative the past two or three years, thinking the bull market was done. But even though I underestimated everything, I didn’t get more aggressive. The more wrong I was about how far the market could go, the safer I got.
It’s not an exact science… You can’t predict how high something will go or how low it will go. But if you understand that things move in waves and it’s good to take profits into strength… you can learn to do well in the markets. And in life.
“Dom, what steps should we take now with the coronavirus lockdown and a bear market?”
With the virus out there you gotta stay safe and stay indoors. But there’s a silver lining to this: it gives you more time.
Over the next couple of weeks, you’ll be spending more time at home. So when you get tired of playing board games and watching Netflix… study. Read my blog.
When you study them, you’ll start to see my mindset. Some people say, “I don’t need a good mindset, I only need hot picks.”
Wrong. You need the right mindset and you need to follow rules. If you don’t — even if you make a lot of money at first — you’ll lose in the long run.
What’s the Right Mindset?
Be meticulous. Study stock market history. Learn to cut losses fast and learn from every trade. Again, this isn’t rocket science. But you have to become a student of trading and the stock market.
"Dom, how am I trading the current market conditions?"
Simple, look for opportunities in all available places.
For myself and other experienced traders, there are amazing opportunities to trade the short term swings and trends across a range of markets. In recent weeks there have been a plethora of trade entry opportunities offering high risk-reward payoffs. We have seen amazing volatility in Gold, S&P 500, Nasdaq, Crude Oil, and all Major FX Pairs, just to name a few.
The patient trader waits to trade the swings by watching for price action signals to identify the short term turning points OR they wait to trade the trends by watching for retracements to key levels and using price action signals to identify when the prevailing trend momentum will resume. I concentrated on hourly and 5 min charts. If you interested trade box theory on lower time frames like 5 min.
I have been doing it for years...
Professionals don’t panic in these situations, they are salivating at the opportunities to profit and they embrace these kinds of market conditions.
Give trades room to move, these are unusual times.
It’s important during this extreme volatility that traders give their trades room to breath, which means using a wider stop loss and an adjusted position size. As an example, whilst keeping the same £ at risk per trade, you may trade 1 lot instead of 2 lots. You may use a wider stop loss of 300 points instead of 100. Remember, wider stops don’t mean more risk if you reduce position size. Do the maths and watch your risk. Normally I would say that best trades work right away but those are not normal market conditions. Give them some room and time...
Use the crazy market conditions and newly found free time to learn and practice your craft.
If your like myself and intend to spend the next few weeks/months at home working or just laying low on weekends instead of going out to see friends and family, you should use this newly found free time to focus on your self-education, to study up on your trading approach and practicing your trading strategies in real-world conditions. There has never been a better time to immerse yourself in the markets, it’s an exciting time to learn and an exciting time to trade.
"Dom, is stock market on rebound right now?"
A recent small rebound in markets is encouraging but way too early to base any real conviction.
Rarely do markets move in a single direction without break for any extended period. Inevitably, there are breathers. The question is whether that break is a temporary reprieve or perhaps the ‘green shoots’ of a new trend. That is the question on many minds after the performance by the capital markets this past session. The US indices lead the risk landscape with a rebound registering as a 6 percent advance for the S&P 500. While that wouldn’t retrace all the losses of Monday’s historic tumble, it matched the volatility sufficiently to raise enough doubt over a default assumption that fear will run roughshod over the effort.
Looking into the intraday performance, some may be feel the reticence in establishing a ‘V-bottom’ is evidence that it is a false dawn. However, such abrupt turns are frequently short-lived and lead to ultimate restoration of next bear winds. In contrast, stabilization can build a foundation that recoveries can develop upon.
So keep tabs on volatility.
My top concern moving forward, is not technical levels on key charts or event risk on the docket. The systemic health of the financial system, including liquidity, represents the arbiter of market bearings. While we had a rebound on Tuesday in a range of assets, the readings remain dangerously high to keep uncertainty as the principal measure of market health. Even though the VIX eased off, we are just off a record high and volatility is still pushing the boundaries. To that end just wait, watch those charts and above all pay attention to fundamental implication of current situation.
To wrap up.
Stay safe during the coronavirus lockdown. This isn’t going away any time soon. There are too many stubborn people who won’t follow the advice to stay home. All you can do is try.
Use the time to study. It’s a perfect time to set yourself up for when this blows over in a few weeks or months.
Finally, my thoughts and prayers go out to anyone infected or with family members who’ve been infected.
What do you think of the coronavirus lockdown? How will you spend this extra time with social distancing and no sports?