Finding Luck in Today’s Market

Today is March 17th 2020 and the recent environment of the Global Market has been on the front line of our news mediums for the last few weeks. Covid-19 has brought shocks through the market as fear levels have risen to near all time highs. The Volatility index is a tool that shows us consumer confidence levels and uncertainty on the same chart.

With events being cancelled nationally, markets crashing down, school closing individuals are being asked to practice social distancing and stores are closing their doors asking individuals to not come in unless it is necessary. This global pandemic is certainly affecting our supply chain and logistics systems which provide supplies and products to individuals around the world.

As individuals in fear rush to stock up and hoard medical, cleaning supplies, and sanitation products the demand for products have risen and there has shown to no longer be a supply to meet the demand globally. As the products soon become available individuals will soon rush again to purchase any inventory in stock regardless of the price.

With the high demand for products as soon as possible organization are going to be investing top dollar towards the protection and safety of their staff and guest. Today as we look at the market we see prices dropping down. When we see prices of stocks fall it is important that we understand the psychology behind the movement.

SPX500USD

The price of the stock is an agreed upon value of what a share of the company is worth. This is dependent on various quantitative and emotional information. When the market conditions are strong we look at the market we go with our intuition and begin to purchase stocks that we like and that are performing well in hopes that they continue to satisfy us both with their products and returns.

Now as we have entered an area and time in the market where volatility has been so high that the sentiment regarding some of these high value stocks have been adjusted. Now the value at which we see certain companies is falling. The reason behind the fall is not due to a lack of confidence in the company but more due to the increase in fear with the pandemic.

As we look to find Luck in the market we need to remain consistent and focused in the market. Showing up every day and maintaining a strong mindset towards how we can implement our strategy for growth and profits. Luck does not come to those who are not consistent. Luck appears when you show up everyday not looking for a golden ticket but working the market day in and day out to the best of your ability. Luck comes in unique situations where the stocks you loved before at high values are now dropping down to record lows.

Remaining Patient

This downfall has been the sharpest drop the U.S. Market has seen in years. Many investors have been eager to jump in and start to open new positions throughout the last two weeks. Personally speaking I have not been rushing to add in long positions in my portfolio just yet. There has not been clear confirmation that the market is correcting itself from this massive drop from global fear increasing. Until we are able to see a clear support level being created rushing into long positions can lead to getting caught in the downfall and loosing precious capitol.

There is no need to rush into exposing your liquid cash to market risks unless you are completely willing to accept the assumed risks. We all understand that the downturn will not last forever. We will see days where the market begins to regain strength and global tensions are relieved. Until then it is difficult for anyone to determine how far down the price of stocks will drop.

The airline market has been one of the greatest victim of the Covid-19 global pandemic. Various airlines have completely resigned and reduced flights routes. Flybe unfortunately had to close doors and seize to fly as they were unable to remain operation after the decrease in flights in Europe took place. Aircraft manufacturers such as Boeing and Airbus have experienced a decrease and reduction of pending orders as the demand for new aircraft is dropping.

It is important to understand the time frame you are analyzing for your investment and take into consideration consumer psychology of the market to best determine lucky opportunities in the market. For example, when we look at a company like American Airlines (AAL) their stock is currently trading at $16.5 at the time of writting this article and just back in 2018, two year before the stock was trading up at just under $60 a share. Considering that individuals were still buying the stock when it was worth above $50 a share now with the stock being only $16.5 this creates a great opportunity.

As an investor the idea is not just to purchase highly performing stocks and ride the growth they are already experiencing but to also determine stocks that are undervalued or listed on sale.

Holding your Position

With volatility nearing up in the 75 range there is still potential for it to continue to move up higher. This should not result in your changing your trading strategy. Staying consistent and showing up everyday will create for lucky situations to manifest in front of your. But these will only appear when you are focused in the market every day with a specific intention to the objective goal.

Regardless of market volatility being at a high we need to maintain composure and hold our confidence not so much in the market but more with ourselves. We need to be confident in the decisions that we make and not be fearful of the market swings that will occur as the market looks to stabilize itself after this massive drop.

Looking forward for this next few weeks we are going to be looking at some transportation and logistics companies such as XPO Logistics (XPO), Atlas Air Worldwide (AAWW) and FedEX (FDX) to see how they play out during the high demand for supplies worldwide. In addition the long list of airlines in the market which are currently trading 50-80% under their highs are showing great potential for the long term outlook.

Volatility S&P 500 Index

There will be great fluctuations as the (VIX) remains high and so we need to look to see when uncertainty levels in the market start to flatten down with consumers. Staying ahead of the (VIX) curve will help us determine the area where the market will look to regain strength. Holding your position means being able to conduct the appropriate research to determine a bias.

Once you have decided on a specific bias it important to have the belief to support you bias. Not having the belief system in your own analysis to support your bias will result in conflict during trading and will potential lead to self sabotage. Self-sabotage in trading comes in the form of closing trades too soon out of fear of loosing money, or not entering positions in fear of analysis being wrong. Having the confidence to hold your own positions is going to be key in building your trading skills.

As always we appreciate your support as we aim to bring you the latest and most important news in the aerospace market. We do ask that you like, and share this article if you gained any value. Thanks for flying by and happy trading!

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Disclosures
Options involve risk and are not suitable for all investors. Please read Characteristics and Risks of Standardized Options before deciding to invest in options: https://www.theocc.com/components/docs/riskstoc.pdf

Air Market Group content is provided solely by Air Market Group LLC and is for informational and educational purposes only. It is not, nor is it intended to be, trading or investment advice or a recommendation that any security, futures contract, transaction or investment strategy is suitable for any person. Trading securities can involve high risk and the loss of any funds invested. Air Market Group, through its content, financial programming or otherwise, does not provide investment or financial advice or make investment recommendations. Investment information provided may not be appropriate for all investors, and is provided without respect to individual investor financial sophistication, financial situation, investing time horizon or risk tolerance. Air Market Group is not in the business of transacting securities trades, nor does it direct client commodity accounts or give commodity trading advice tailored to any particular client’s situation or investment objectives. Supporting documentation for any claims (including claims made on behalf of options programs), comparison, statistics, or other technical data, if applicable, will be supplied upon request. Multi-leg option strategies incur higher transaction costs as they involve multiple commission charges. Air Market Group is not a licensed financial advisor, registered investment advisor, or a registered broker-dealer. Options involve risk and are not suitable for all investors. Please read Characteristics and Risks of Standardized Options before deciding to invest in options.

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