Let’s talk about something we’ve been talking about now for days… weeks… months…
Panic.
Specifically panic around the coronavirus, how it’s affecting the markets, and what you can play in a situation like this.
Here’s the panic playbook we’ve been looking at…
STEP ONE: Coronavirus Panic Playbook
So to start, I want to talk about the positions we’ve put on in the Futures Room as a result of this panic playbook. Now to be clear — these are positions that I’ll continue to press as long as they present themselves, Gang.
But what do I mean by this “panic playbook” anyway?
Well these are those setups that will continue to get knocked down as fear around this virus grows. While it may be because of an unfortunate circumstance, these knocked down setups are where we’ll find the most opportunity.
If you recall, some of the easier knocked down setups we’ve been able to identify are Gold and Bonds. (However, I don’t feel the need to dive into these guys because I did so in my last newsletter here.)
STEP TWO: The Patience Needed As a Pullback Buyer
Gold and Bonds are both signaled with double green… which means… I’m getting long.
However, I want to focus on the pullback aspect of this market right now. And to do that, like I said, I’ll be talking about positions we’ve put on in the Futures Room.
Now oftentimes, Gang, whenever we have a pullback, these positions might take a minute to come back… then take another minute to get going again. So be patient. These are positions we took on the 4th, the 5th, and the 6th of February and on the 24th we were just starting to see the fruits of our labor.
This was especially true with our short position in the MSCI shares of Hong Kong.
STEP THREE: Short Position Opportunities
Now say for whatever reason we couldn’t, as a Futures trader, go and trade the index Futures of Hong Kong…
We could still go grab these positions and get short:
- EWH
- EWS
- FXI
Which is again, something we did, Gang.
As Futures traders we have the unique ability to understand the inner workings of where commodities and currencies meet equities markets, and where commodities and currencies are going to give us opportunities in panic environments like this.
They can help us see where that flow’s going to go, Gang.
