Is the Bottom In

October 31, 2020
October 31, 2020 Ryan

Is the Bottom In

The equities market is freaking out and for good reason.  Covid-19 is out of control again and the presidential race is an emotional shit-storm.  The market wants two things: predictability and happy consumers.  Neither of which we have right now.  Who knows what’s going to happen, but it’s not a comfortable time to be throwing money around.  However, don’t be fearful.  Remember, money is made when great companies are at a discount.

Headed into Monday, I’m a little heavier in cash than this time last week, including in my 401k.

  • 401k is sitting at 25% cash (Money Market), some bonds and a little Large Cap Equity.
  • I made no changes last week to my Roth positions.  The account is a pure dividend income account.  I won’t pull a dollar out of it for at least another 10 years.
  • I’m at 40% cash in my eTrade trading account.  I don’t trade in and out of this account as often as I do with Robinhood, but I did make some moves last week.
    • I hedged my accounted headed into the weekend by adding some SDS to stop the bleeding.
    • Added TDOC on dip
    • Sold TSCO for small loss
    • Added SBUX

Outside of that, I didn’t do much.

My eyes are now on SPY’s technicals that appear to be BULLISH. Yup, I said it.  The Friday drop in the market was predictable, but the afternoon strength hinted that we may have reached a temporary bottom.  The line is in the sand.

An eye on SPY:

Wednesday failed the line of support.
Thursday failed to recover, leading to an obvious down day on Friday.

However, a closer look at the chart indicates a late day recovery and finish above one of the pivot points.  This is a good thing.

SPY

If the market can hold above that lower support level around 320 through Tuesday, I’ll start adding long in small chunks.   Beyond that, I’m not sure what to expect over the next few days. I plan to stay out of the way and let the elections and Covid do what they are going to do.  No reason to guess.  However, I may day/short-term swing trade some small positions in the Robinhood account.

Stay nimble.

 

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