As I write this evening's blog, the futures are up 800 points on the Dow. Gilead has jumped 15% in after-hours trading on news that it has a drug that is showing "encouraging" early results in fighting the coronavirus in a clinical trial. Trump is working to get the economy going again in spite of push-back from the 'politics-as-usual' crowd in DC. I'd name names, but you know who they are.
All of this bodes well for a market that is desperate for good news that the end of this pandemic-driven shut-down is maybe in sight. Ok... I'll go with that thinking, but I can't shake the feeling that this is another short-term sugar-high and one of these days, the market will come to realize we have two wars raging: the coronavirus war and the economic collapse war.
We will win the coronavirus war; that I am sure will occur, one way or the other. The economic collapse war is far from over and, as of yet, the only light at the end of the tunnel is a potential freight train, named "The Depression Express" and it is roaring in our direction unless this country, and the world, can get back on its feet and people can get back to work.
But, for now (with regard to the market) life looks absolutely wonderful. Our Tactical Growth strategy is way up this year and surging high in after-hours trading. And, yes... we already own GILD in this strategy. We just might have one of the best days of the year tomorrow, if the futures tonight hold.
You might be thinking... what happens if Mike is right and the market has another crash coming soon? How can he be long in this market and stay prepared for a potential crash? I use a dynamic stop loss setting that is tied to the normal volatility of each holding. I know how much a stock can move against me and still be in an up trend. And, here is the important part... I am raising those stops every single day that the holding moves up. The key is to get the stops above their respective basis price as soon as possible to lock in profits. I have raised stops in every position that moved higher this week, every single day. I'll be raising them a lot in the morning before the opening bell.
If you are not a client of mine and if you are managing your own money, I cannot overly stress the importance of having a disciplined approach to keeping stops in place and moving them higher when your holding moves higher in price. The stops are our insurance policy against a suddenly reversing stock market. One may not come as I expect it to, but one day (generally when you least expect it) it will happen and that is when the "stop-loss insurance policy" will pay off...big time.
If you have someone else managing your money, please ask them if they are using stops and how they are being managed. Anyone who puts money at risk in the market should have a well-defined stop loss strategy. Otherwise, you are just a sitting duck, ready to get blasted out of the water when the next major sell-off occurs; and that day could be at any time... probably not tomorrow... but it still might.
Stay safe. Stay healthy. Stay optimistic!