As we wake up on Thursday morning February 27th after a big market drop this February the SPY is at the 200 day moving average. Often the market bounces from this level. Even if the trend remains down, shorts should be very careful today.
Traders can buy stocks that are not as affected by the coronavirus issues or can trade the SPY long if pressure comes off at this level. This is likely not the buy of a lifetime but a possible short term trade opportunity.
Wait for the turn to begin if you look for opportunity here. Don’t try to catch a falling knife is an expression that applies here. Also, if you invest use a tight stop as risk control and trim your position promptly when you begin to accumulate profits.
The danger here is to the shorts with the market oversold this is a place where a sharp rise may create a short term covering panic.
The rally I was looking for developed after the morning lows. However after a 600 point rally the market ran out of steam and closed below the 200 day moving average. The downtrend may now accelerate and go to a much lower level. clients need to have a plan for risk management. Quality assets are now being revalued.