 What's up trade hackers welcome to today's update today's Monday March 23rd before we jump into the charts We're gonna start doing a trade hacker question of the day So these are questions that have come in by email or posted in the community We're gonna try to keep them very timely to what's going on So hopefully this helps others that may have been thinking the same question, but didn't ask it themselves Today's question. Do we really need circuit breakers won't traders ultimately determine the supply and demand of the markets? So just to just to reiterate what that means is The if the S&P is down 7% while the markets are open Trading is gonna automatically be halted by the exchanges for a period of 15 minutes If it drops another 13% it's gonna be halted another 15 minutes And if it goes down 20% in the day the markets are gonna close for the rest of the day And so the question is do we really need these circuit breakers? Won't the buying and selling and supply demand of the traders ultimately determine price and I don't know the answer to this because obviously we don't know what would happen We've seen I think the markets hit the initial down 7% circuit breaker three times Maybe four. I think it was three times though during this corona crash that we're seeing and so Ultimately two out of three times it paused and it actually Rebounded and went up a little bit the rest of the day the other one it paused and then it ultimately continued lower So whether or not do we really need these circuit breakers or not? I don't know the answer to that question and I'm not gonna act like you know what I tell you is Absolutely, correct. I have my thoughts. I do think Given the markets given the computers time to catch up given traders time to think and pause and take a breather I think it's a good thing and You know this doesn't happen very often where we are in a situation where these circuit breakers come into play But you know back in what was it 2010? We had that flash crash We've had other certain situations where I think You know that was kind of blamed on some high frequency or the algos and things like that And who knows if that's really the case, but the bottom line is in my opinion I think these circuit breakers are a good thing. It just gives everybody a time to pause Breathe I know when it's happened. Well, I'm trading. I will get up from the computer I'll go do something else and just kind of let my thoughts kind of take me take me where they may But I think it's a good thing, you know I think it just gives us a time to recoup and get back to potentially thinking a little bit more Open-mindedly not not letting you know for in a situation where our emotions are Really getting fired up because of the current situation. It gives us a chance to take a breather So ultimately I think it's a good thing Whether or not the market actually reacts differently after the pause comes off Who knows, you know, we'll never really know the answer to that question But let's jump in to what's going on today. No circuit breakers have hit today. The S&P is down 78 We've got about 14 minutes left until the market closes S&P is down 78. The Nasdaq's only down about a half percent. It was actually trading positive for a lot of today Dow Russell S&P all trading significantly lower oil catching a nice little bid today up about three percent Gold up big up five percent silver up seven percent bonds up two and a half percent So kind of a mixed bag in the market overall. Oh, and then the other thing I wanted to point out was look at the VIX futures stocks down big VIX down big so volatility futures trading lower by over 14 and a half percent when the markets down obviously these two are typically on a Inverse correlation meaning if stocks are down volatility is going to be up But in this case the VIX is the volatility is getting crushed today even with stocks down Now one thing to think about and consider when comparing the S&P 500 for example Let's just use the S&P as the market when looking at the S&P and Volatility when this thing bottoms that's not necessarily going to coincide with the peak of Volatility so let's say right now was the bottom well volatility peaked several days ago And it's been contracting the last few days Whereas if we look at SPX It's hitting new lows since this downside has started now. Let's take it a step further If we go back in time and take a look at what happened in 2008 so I'm going to go back 15 years on the charts in SPX and So let's scroll back to the 2008 situation so and I'll zoom in here So this is 2008 the market bottomed in March of 2009 So it was at March 6th. I believe yeah March 6th of 2009 is when the S&P bottomed But look at where volatility hit its peak. So if we look at VIX during that same period What you'll see here is the VIX peaked it hit almost 90 back here in October of 2008 and it continued to contract and in March of 2009 was right here So volatility had already contracted significantly and so, you know, just kind of an interesting thing So the volatility peak does not always coincide with the market bottom So keep that in mind now. I'm not saying that volatility has peaked at this point during this session But, you know, it's certainly could have it's starting to contract where the market's still going down So now that happens several times throughout that 2008 2009 situation where you had volatility Contracting and the market was still continuing to hit new lows So don't take this as the market is going to be bottoming soon and that volatility is peaked because this Volatility could certainly turn around spike even higher and obviously the market continued to push lower So I think we're still think we're gonna see more lows in the market You know, I think a lot of this really just depends on The duration that things are shut down for the coronavirus, right? so You don't know how long these things are gonna be shut down a lot of areas are kind of on Stay in your home orders until for the next month But if that extends to two months to three months and this coronavirus really is not being able to held under wraps That financial devastation to individuals and companies is gonna extend longer as well So we just never know what's gonna happen. So again, you've got to stay small You've got to stay mechanical and that's what we talk about and teach every day. So what did we do today? Well, we just continued to roll down our short delta position So we had several positions that we just rolled down continuing to extend duration Keep those short delta positions in our portfolio as the market continues to go lower We added a an iron duck in SPY So we got a big buffer to the downside with no risk to the upside if this thing does make a bounce We did have a position in Roku Let's take a look at Roku, which we're not doing a ton in individual stocks right now Just because there's so much implied volatility so much juice and in in the broad markets But you know Roku up 16 percent today. We had a reverse duck on here So we went ahead and just bailed on that with that big spike today So we are out of our Roku trade, but taking a look at some of these other stocks, you know, Apple down a few percent Amazon up a couple percent kind of a mixed bag across the board a lot of red and green Not just all bearish not just all bullish by any means, you know, Home Depot up six percent Get Macy's is under five dollars down another twenty percent today I'm not sure Macy's is gonna make it through this. I mentioned Roku up sixteen percent Some of these other look at wind casino winds been catching a bid the last few days, you know So it's up over eleven percent today and it's third day in a row that it's catching a little bit of a bid So we're seeing some some upside in stocks and we're seeing some more downside I mean United Health Care down, you know, five and a half percent so it continues to to trade lower So a lot of crazy stuff still going on So again, just keep your position size small and stay mechanical and we'll talk to you tomorrow. See ya