Stock market drop. What to do now?

Hi, welcome to this new video. I think from the screen is already clear what is the topic I want to talk about. Yes, yesterday there was a huge drop in the stock market. And if we look at the numbers, you can see the Dow Jones, the S P, the Nasdaq, the major US markets went down more than 3%, almost 4% for the Nasdaq. Other markets as well, you know, this one is the Chinese market is down 2%. So the situation is quite bearish. At least yesterday was like that because as I said many times, we never know what is going to happen. If you look at the chart, you see this very big candle. Now if you don't know the meaning of the candles, I made a video about that. But this long tail means that. Well, yes, the price opened around here. It went up, up, up, but then it went eventually down and it closed below the open price. So there was some opening with a gap. Okay, Then after the initial gap, price went up. So there were buyers trying to push the price up. But then eventually they could not sustain the pressure of the sellers and the price went down. And this is also associated with a huge volume, as you can see here. This is the volume chart and you see that is rising. So this movement was also again associated with high volume. And this means the move is even more significant. Now what to do next? That's the question, right? If you watch my previous video, I told you, do not follow the news now you will find probably many people saying that because of whatever reason, the virus or the slowdown of Chinese economy or whatever it is, then this is the start of a new bearish market. But we don't know. So looking at the chart, what can we say? First I will say that yes, the price went below the 50 moving average, this blue line and this is not a good sign, let's say. But if you look at the chart, you also see that around this level there is a support area. Okay, because the price was testing that support here. Maybe I show you with this is clearer. Okay, so you can see this area. The price was testing here, then testing here. That is also the 50 moving average. And then it bounced here. See, low was around here, but then it closed above. So what does it mean? There are two scenarios in my opinion. The price today may still go down. Scenario number one. So if it's still going down, the first, the next level that we should look at is the 150 moving average. And next one I think is this, this line, another support area here. Okay, so there is this candle and I Can draw it again. So you see, I will say around this area, Why this? Because it was tested here and here and then is also close to the green line. That is the 150 moving average. That is another support. So the price may go down or because this support is still valid, the price may go up. So you could see a green candle, right? You may see something like a big green candle or the price may still be around here but not going down the support. So. So maybe something like that, maybe another candle testing support or probably something like that. A dodgy. So you know this kind of candles like that where basically it means there is war against the bulls and the bears and it's not clear what is going to happen, right? So given those scenarios, what should you do? Now this is a very important question because I think if you have open position especially you may be scared about what's going on. So let me give you some suggestion that hopefully will help you decide how to manage that. And I will split this in two because the question is, are you a trader or are you an investor? And you will see that what to do, what to do is really different. Because if you are a trader, remember a trader for me and I hope for you as well means that you enter your position, you do your position sizing. If you don't know what I'm talking about, I made a video about that. Meaning to say you have to know how many shares to buy, where to place your stop loss and possibly where to put your target profit. So if you are a trader, currently I will do nothing. Just wait for confirmation. What do I mean? Wait to see if the market goes up or. Or keep going down. If the market keep going down, you may wait a little more and maybe start to take short positions. If the market starts to go up, then maybe you can start to look at long positions. But currently is not clear. There is another thing that you can do is basically look at ETFs, okay? And especially ETFs that are not correlated with the S and P. Example say that you want to go long. Well, if you look at what happened to the bond markets, you will see that the bond market is going up. So here I'm looking at the 20 years bond and usually bonds and stocks are inversely correlated. So you see There are some ETFs that are going up actually when the stock market is going down. So this is one the TLT or if you look at gold is even more right Then there was a retracement but the gold price went up recently. And then you can also look at inverse ETFs. So my suggestion is in this case, either you do nothing or you may look at alternative markets where you may have some kind of trade opportunities if you find something that is respecting your entry rules. But if you are an investor, then the story is different because this drop can be an opportunity to buy. Why? Because when you invest, what you would like to do ideally is to have a watch list of good stocks or maybe even ETFs that you want to buy at a good price. If a stock, usually you want to calculate some intrinsic value, that is the fair price you are willing to pay. And whenever the price is below that, you can buy. So because of this drop, many stocks now had a huge drop in price and they may be below your intrinsic value. So this may give you opportunities to buy more. But then you may say, well, great, but what about my unrealized loss? Because of course, if you have a portfolio and you are a trader, then you just hit stop loss. Fine, you look for next trades. But if you are an investor, you have unrealized profit and loss, right? And now you may have a huge unrealized loss. Why? Because you don't have stop loss if you're an investor. So if you are feeling bad about that, first of all you should not, because again, when you invest, you should know that these things can happen. You cannot just go up and everything is great. These periods can come. So you need to be mentally prepared to face such situations. However, that being said, there is something that you can do if you know is hedge. Hedge, meaning you can take positions, short positions that are basically making you money when you are losing on your current positions. And to do that there are many instruments you can use. Options, for example, you can buy, put options, but again, do that only if you know what you are doing. If you don't know options, don't do that. Or you can use the short short or inverse ETFs. So you may take a temporary short position and then when the market starts to go up again, you can close the position. But this is optional, okay? This is optional even if you just buy more or if there is nothing at a good price for now, even after this drop and you are sustaining some realized loss is part of the game. So you should not feel bad about that. You should not panic. Definitely you should not sell all your shares because someone in the news tell you that the doomsday is coming. Okay, so to summarize, let's wait and see. I think today when the market opens or actually tomorrow after market closes we will have a better picture. We will see if the price keep going down then we have to wait or if it's going up then we can start to start to look for some long position. Why? Because it means that probably this support hold and at the same time if the price is still around here and is not moving much in this area then you can still wait because it means the support is being tested and is still not clear if the bears or the bulls are who is winning this battle. So with that I thank you for watching and as usual, if you're not subscribed, you can hit the subscribe button and the notification bell and if you have any question, any comment, something is not clear, just write me a comment and I will answer. And with that let's see what happens. I also don't know. I'm really curious to see tonight what is going to happen in the stock market. And I say tonight because I am in Singapore. So the market opens in the US when here is night and let's see what happens. See you next time.