Very few things in the world have the ability to be as incomprehensibly irrational as the day-to-day moves of the market. This was the case today as the markets sold off because the Fed minutes said exactly what every single person who owns a share of stock in anything already knew: the Coronavirus is bad for the economy.
The Fed said that “the ongoing public health crisis would weigh heavily on economic activity, employment, and inflation in the near term and was posing considerable risks to the economic outlook over the medium term.” Well no shit. That’s exactly why we are where we are. That’s why the stocks that are outperforming and dragging the QQQ higher are dominating. That’s why the stocks that are lagging and holding the IWM and SPY down are lagging.
Here’s what happened today. The Fed said the obvious. The computer algos read the news and sold because they want to buy the market back lower. This caused a bunch of day traders to get stopped out on their day trades. This caused the market to drop. This caused some people who have big profits to take profits near the old highs of the S&P 500. And now this is causing futures to trade lower. Here’s what didn’t happen… Absolutely nobody in the world said, “Oh no, this worldwide pandemic isn’t a good thing?! Sell, Martha! Sell it all now!”
I don’t know why this bothers me so much. I guess I just hate irrational behavior. As for us, we were fine today, pretty much break-even. I didn’t have a single position that was up or down more than $30.
There’s a pretty good chance I’ll be buying some QQQs overnight, and some NVDA if it bounces off $460 in the morning.
Irrational or not, follow your rules. If irrationality drives things lower than you wanted to hold them, you sell. You can always get back in. That’s all for me, have a great night.