I know what you are thinking.
“How did this happen? Why didn’t I see this coming?”
The answer is one of two things: Either no one told you, or no on knows.
Hopefully you know the answer to this question. No one knows what will happen in markets in the future.
While we can do our best to study the information available to us and be as well prepared for all situations as possible, no one can know when a day like we just experienced is going to happen.
There were warning signs, and they were noted by us here at the Society, however even we did not act fast enough, or well enough, to capture the gigantic gains available due to the action we saw in markets today.
What I am speaking of is the opportunity to capture downside or Volatility upside as markets are spiraling lower. We had devised a plan to buy volatility coming into the day, but were not given the price point we had scouted out in our analysis. In other words we wanted the VIX to dip lower than it did intraday before it went on it’s 100%+ gain today.
Alas one can never be perfect or catch all the moves that happen in the market. We were happy to have been in an all cash position going into today. We used the opportunity to study price action and do our best to prepare a strategy going forward as we see how this rise in volatility in markets will play out.
The soundbite version of this write up would be this: “Less is more”.
Attempting to catch every twist and turn can be dangerous. Rather it is most beneficial to identify the structure of the market and determine the relevant levels which should be referenced for trading or investing activities.
Overall the message here is to be extra cautious and thorough in your analysis and actions.
All the best and as always please feel free to reach out with an email or in the comments section of this post if you need help or have questions.