Managing Today's Gap Down - AMD, TSLA in the Spotlight

And just like that, bulls are caught flat-footed. The Fed's on tap.

Technical Edge — 

• NYSE Breadth: 77% Downside Volume

• NASDAQ Breadth: 79.3% Downside Volume

After a stellar run off the lows, a mild dip and a great bounce/rotation on Friday and Monday, the ball looked to be back in the bulls’ control. I don’t want to give one day too much credence, but if we lose support I will not hesitate to switch gears. 

I have seen people call this “wishy-washy” or negatively reference this “flip-flopping.” In a choppy market, it can be painful (or deadly without enough risk control). 

However, I consider it essential to go with the flow of the market. Traders that don’t, end up stubborn and fighting something they can’t control. Let’s say we’re rolling over and are going lower. You don’t have to be a seller necessarily, but just knowing that it’s not time to be a buyer can save you plenty of mental and financial capital. 

Game Plan

Today is a big day in terms of what the Fed has to say (at 2:00) and in terms of seeing whether some support comes into play for the market. Before we look at the technicals, I want to break-down our trading style and we’ll use Apple as an example. 

I have gotten some questions/emails about this, so let’s break it down really quick. The premise is simple: 

1. Enter a trade

2. Have a predetermined stop

3. If we hit our first target, raise stops to B/E and look for target No. 2

On Monday, we were looking for a daily-up rotation over $174.90 to $175 and that “If it holds, we could see a quick push back to the $178+ area for a trim.” 

Some traders like the B/E stop, others don’t. In a big bull tape, I will be more lax with the stop-loss. In a tape like this, not so much. 

I would just say, do what works for you. This style works for me and I would rather walk with ⅓ to ½ of my profit at Target No. 1, then let a trade go from green to red. But this mentality is not for everyone, so do what works for you!

Anyway, I hope this helps when it comes to managing some of these trades!!

S&P 500 — ES

The ES is continuing to sell off overnight and into this morning’s pre-market session. Already down about 40 handles, let’s see if the 200-day can buoy it. 

If it does, an early bounce back to