How to Profit in a Volatile Market

Within the first trading hour on Thursday, both the “SPDR S&P 500 (SPY)” and  “Nasdaq 100 (QQQ)”  dropped 1.1%, rallied 2%, then declined 1.3% before settling around midday while attempting to stabilize, following yesterday’s steep sell-off. This is seemingly the new normal and very “2020” — a year best summed up as: “unprecedented,” presenting unique opportunities for nimble and opportunistic traders. To date this year, there have been 42 days where the SPY and QQQ have moved above 2%; more than quadrupling the average number of 2%+ sessions in the last five years.

In fact, in 2017, there were only eight days that saw moves in excess of just 1% — one of the least volatile years on record. The SPY has now given back most of its year-to-date gains with both it and the QQQ’s still standing in the 10% correction territory. While I think we could see a short-term bounce, I maintain my stance from last week that the selling is not over.  

Likewise, I think volatility will remain high well into 2021.  My belief rests on several factors. First, it’s looking increasingly likely that the election will be contested without a resolution for weeks after November 3. Second, the coronavirus isn’t disappearing causing most of the world to keep retrenching in terms of reopening the economy. And finally, historical…

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