The bigger picture

Reminder: this newsletter, in its current form, is being overhauled on Monday. I’m moving all the market insights into the Trading EmpIRA community and moving the free broader insights to Substack. I will no longer be using Beehiiv.

I’ll admit, yesterday I was feeling nervous about the market.

At first glance — and second, and third glance — it looked like a nasty pullback.

Have the bears finally taken over?

The Fear & Greed index, sitting at “Extreme Fear” says the market is feeling that fear too:

With all this “blood in the streets,” how do I keep from panicking?

Two solutions worked for me yesterday:

1. Pullbacks are normal and my trading system has a gameplan to handle them — and collect even more premium along the way.

I can’t stress how crucial it is to have a gameplan already in place for how you’ll handle “emergency situations.” I say that in quotes, because this pullback was nowhere close to an actual financial emergency, even if it feels like it.

2. Looking at the bigger picture (i.e., the longer dated charts)

When I look at the market charts, like the weekly and daily charts, I can easily see that this pullback is just a move down into support levels.

More:

When I look at those daily charts, I can see that the markets are actually putting in higher lows even as they creep along making higher highs. I’ve circled some examples on the /ES (the S&P 500 futures) chart below:

Of course I want to see these levels hold today, but just because we’re in a nasty pullback doesn’t mean it’s time to panic. In fact, we should never be panicking.

We should always be trading our plan.

If you want to learn my personal trading system — one I use to target 112% premium growth, on average, each year — then the doors are open. You can sign up for a 7-day complimentary trial and see what the Community is like (I will be ramping things up there, starting on Monday). 

This afternoon, for the final hour of the trading day, I’m hosting a live stream to chat about the markets and close down the trading week. You’re welcome to join me, if you want.

www.skool.com/trading-empira

Tech is leading losses again as a slide in Dow, Nasdaq and S&P 500 futures picks up pace.

Yahoo Finance

Why it matters …

From the article …

“Another sea of red awaits stocks after Thursday's bruising session, which saw the major indexes log their steepest one-day declines in over a month.’”

The pullback continues. Don’t panic, this is normal … well as normal as anything else the market does.

Comments: Crimson start to the day … again. Good day to roll positions and collect premium. Net liquidations are taking a beating, but I must remember those are “unrealized” losses so I will  stay in my positions and leave them “unrealized”; exercise patience and wait for them to become “unrealized” gains for a while before exiting for a profit.  It’s a time thing…

Check your positions like a normal Friday and be prepared to make adjustments based on your preferences.

An Alpha scan trade idea for around 1.72% return on risk into next Friday’s expiration.