There are Two Ways to Approach this from Here
The market is getting into rare air territory with a broad spectrum of equity indices and their accompanying ETFs reaching single digit ConnorsRSI levels. The selling is global and it has covered the range of high volatility instrument’s to safer, lower volatility equity instruments. Overall though, as I mentioned last week, this type of selling was needed because of the record levels of bullishness coming from investment advisors.
There are two ways to approach this from here. The first way is to plunge in further and further hoping to catch the bottom (it’s been well rewarded for three years but this is reckless).
The second way is to simply look at this as one pullback within a larger number of pullbacks which occur every years. The risk is contained (meaning you have a fixed amount at risk) and should the market continue to drop, you’re amount at risk is set. When the market bounces, you will be there to catch the move.
At this point, most equities and equity related products are showing higher levels of correlation than we’ve seen for some time. Therefore buying anything that has an equity component (or is related to equities such as the volatility products) is going to move based on the securities volatility. Be prudent here, especially considering that volatility has picked up across the globe.
Today’s Potential Opportunities on Further Pullbacks:
ETFs: QQQ