The Market’s Declining, But You Can Still Profit From These Sectors
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ETF Trade Watch
Since the rally not too long ago, the market has seemingly begun to turn, or at the very least, hit a zone in which it has been chopping back and forth. Choppy markets is not something traders like to see, as it makes trading a bit more tricky than it already is.
Thursday was not a great day in the market. After rising on Wednesday into the close, the market spilled over in the after-hours session and leading into Thursday. After rising slightly, the market again took a dive into the close Thursday and the after-hours was even worse.
Now, the market seems to be fairly weak looking and lower prices could be in the mix. Traders should be mindful of this choppiness, practice patience so as to not chase bad trades and squander away capital. Remember, we need to play the long game when it comes to trading, don’t go for broke and blow up your account. Trade smart, trade safe, and live to trade another day.
ProShares UltraShort S&P 500 (SDS)
Today is a good day to remind ourselves of playing the downside. There are a couple ways to do this, one is to go short areas of the market that get hit hard on down days, such as Tech or Communication Services. Another way is to go long inverse ETFs. These you can play the shares or options, which gives you much more flexibility.
Puts on a sector like Tech when the market gets weak is also another high probability trade as we know, fairly reliably, that this market is usually what drags the market lower. Be on the look out for either of these strategies if the market continues to lose strength, even if just over the short term.
Health Care Select Sector SPDR ETF (XLV)
Another sector to have on watch in a highly inflationary environment, as well as when the market is in a decline, is Healthcare. As you can see in the video below, the market basically flips 180 degrees when prices fall.
Healthcare was trailing the market when stocks were climbing, but now is toward the top of the list as prices decline. Keep this sector on watch and gauge its performance, as well as that of the market’s, for an options to play the downside.
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I look forward to trading with you, but until then, as always…
