Dead Cat Bounce or Market Rally?

“If you throw a cat off a high-rise building, when it hit’s the ground it will bounce.  But it’s still dead.”

~Anonymous Trader~

October 20, 1987

Now that the markets “bounced back” from Monday’s 2,000-point thrashing, you have to wonder if we’re looking at a dead cat bounce.

Tuesday’s opening trade was over 904 points up.

However, by 11:36 the DJIA was down -122 from Monday’s closing price.

“In Plain English” that means that the market fell over 1,000 points from it’s 9:35 high in two hours.

The rest of the day saw multiple swings to the up and downside only to close at +1,167.14 for the day.

Days like this are the ALGOS (Hi-Frequency Trading Algorithms) wet dream.

Why?

They make a fortune trading in and out of stocks in nano-seconds…especially on high volume erratic swings.

Example:  An Algo buys 1,000,000 shares of a stock and sells it within a nano-second – think blink of an eye – and pockets 3 pennies in profit = $30,000.  Before another second goes by, they sell the same stock and capture another 4 pennies on the downside for another $40,000 profit.

$70,000 in less than 2 seconds?

Yep.

Think about what happens during the course of the day with this action and you’ll see why these guys make fortunes while the vast majority is losing.

Ironically (or NOT) because of the speed involved, we don’t see those trades.

The bottom line is, you can’t compete with the boyz in this game.

You can, however, take advantage of the volatility we’re seeing in 2020, The Year of Chaos.

Learn how to profit AND thrive during Turbulent Times in our March issue of “…In Plain English” (HERE).

Once you “get it” you won’t need to worry about whether the cat bounces or not.