They say, the index doesn’t move a lot. Today, the NASDAQ moved up by 12%! Yes you read it right, that’s the index!
Reason? Trump announced a 90-day pause on his tariffs for all countries, except China.
He made the announcement exactly at 1pm and the stock markets soared by 10% in the next 10 minutes. Crazy, unbelievable, six-sigma move!
This is the biggest single day move after 13-Oct-2008 which was during the Great Recession.
US tech stocks
Tech stocks rallied like crazy today. Most of these stocks are down by 20-30% YTD because of all the uncertainty surrounding Trump’s tariff plans but today it was a different game for these tech stocks.
Leverage can be a killer
The TQQQ which is a 3x bull ETF on NASDAQ rose by +35% in a single day! Similarly, SQQQ which is the 3x bear ETF on NASDAQ crashed by -35% on the same day! Imagine, having your full position in these leveraged ETFs.
My learnings
- When there is a big big drop in the index +/-5%, avoid buying on that day. Usually a similar big drop follows on the next day.
- Biggest market recovery days are followed immediately after big drop days.
- Avoid going all in. Take a 60-70% position size of your total equity.
- Buy in small chunks on any more fall days. For eg: buy +$1K worth of the index for every 1% fall.
- Have courage and conviction.
- Stop following market news.
- Recovery usually starts when the news cycle is bad.
- During a downtrend, get out of any quick bounces. The market usually falls back to lower lows.
