It seems coronavirus trades and stocks are still at the center of the market. It’s been a wild few months in the stock market, and it’s not over yet.
There are still plenty of opportunities out there for smart traders … But coronavirus trades are constantly changing. That means finding the right opportunities for your strategy can be tricky these days.
With the unprecedented events we’ve experienced in recent history, the market’s made some highly irrational moves. In such a volatile market, you gotta be nimble. It’s vital that you have the ability to constantly adapt.
How are coronavirus trades changing, and how can you adapt in kind? Let’s take a look at what’s happening in the market right now, with plenty of examples of recent runners.
Table of Contents
- 1 The State of the Market
- 2 What’s Happening With Coronavirus Trades and Plays?
- 3 The Trump Effect
- 4 Coronavirus Trades: What’s Not Changing
- 5 StocksToTrade for the Most Up-to-Date Coronavirus Plays
- 6 Keep Surviving, Keep Thriving
- 7 One Platform. One System. Every Tool
The State of the Market
To understand the current market volatility, you’ve got to understand a little bit about what’s going on in the world right now.
In the U.S., confirmed coronavirus cases are now over the million mark, with over 60,000 deaths. We now have the highest number of confirmed cases in the world.
Across the country, stay-at-home measures mostly remain strong. Although some states have made tentative steps toward reopening, including Alaska, Georgia, and Oklahoma.
Across the globe, countries including France, Italy, and Spain are talking about ways to get everyday life going again. It’s putting people in a more optimistic state of mind.
That shows in the market. On Monday, April 27, stocks were up in the U.S. The S&P 500 had its highest close since March 10. That’s in spite of the oil crash last week — the oil sector is still kind of a mess.
Now that we’ve laid out some broad strokes about the market and the world, let’s talk about how coronavirus trades are shifting as a result. Here are some key things I’m noticing…
New Catalysts Emerging
Call it the coronavirus ripple effect. The coronavirus has had a massive effect on a variety of industries and the global economy. This has led to a whole new slew of catalysts that are making waves in the market.
Maybe the most dramatic example is the oil crash. As I wrote in a recent post, the coronavirus wasn’t solely responsible for the crash. But it was a big contributing factor.
That lack of demand is largely due to stay-at-home orders related to the coronavirus. That’s resulted in drastic travel reductions. With cars parked and planes grounded, we’re using a lot less gasoline and jet fuel. A lot of companies aren’t running, and the machinery doesn’t need as much juice.
Brought on in part by the coronavirus, the oil crash has been a massive catalyst. Oil prices have plummeted. Some traders are choosing to short sell, and others are trying to dip buy.
There could be opportunities for traders with oil. But it’s important to be VERY careful and avoid overnight holds. There are just too many unknowns.
Unexpected Sympathy Plays
Last week, a bunch of shipping stocks started running. What could that have to do with the coronavirus?
With too much oil and nowhere to store it, space on huge tankers is suddenly at a premium. And the rates are going up. This means that shipping companies could benefit.
Take a look at Teekay Tankers, Ltd. (NYSE: TNK). Before the oil crash, it was trading just below $18. Since the crash, it’s gone up to nearly $27. Take a look at the chart:
Since the oversupply of oil won’t stop being a problem any time soon, it could be worth keeping a few shipping stocks on your watchlist.
The Trump Effect
When President Trump mentions a company, it can have a huge impact on the stock. But beware: it doesn’t always last for long.
I’ve talked about this before — there’s even an entire episode of the SteadyTrade podcast dedicated to the topic of President Trump’s tweets.
One example is Aytu Bioscience, Inc. (NASDAQ: AYTU). A week or so ago, the company announced a licensing deal with Cedars-Sinai in Los Angeles to create a UV light that could kill pathogens.
A few days later, Trump mentioned that UV light could kill the coronavirus. Say what you will about the medical logic behind that, but shortly after, the stock jumped from the low $1s to over $2.
Teladoc Health, Inc. (NYSE: TDOC) is another example. Back in March, Trump stressed the importance of telehealth. The stock started to spike quickly. Since then, it’s gone from the $120s to as high as $203.
Shorts Are Tricky
In a recent webinar, an STT Pro member asked me about shorting a rental car company. At first thought, this seems like a no brainer, right?
From a macro point of view, cruise lines, airlines, and rental cars all make sense as shorts … They’re all in trouble.
But then you actually look at the chart for Hertz, aka Herc Holdings Inc. (NYSE: HRI), and you see this:
Yep, that stock is stepping up!
The point I’m trying to make is that short selling during the coronavirus is tricky.
The market volatility, stimulus efforts, and the emotions attached to optimism about reopening can all create spikes. Even with shorts that seem like a sure thing.
Personally, I’m sticking to the long side — whether it’s a virus or stay-at-home play.
Another caution I have about going short? Avoid weekend holds. Pluristem Therapeutics (NASDAQ: PSTI) is a great example. Plenty of people went short on this stock going into the weekend. It was looking like a loser…
But here’s the thing … penny stock companies LOVE putting out news on Monday mornings. That can make things really ugly for short sellers. Just check out the chart:
It all goes back to one of my favorite STT mottos: “Only losers hold losers over the weekend.”
New Tech = Changing Landscape
If you bought Zoom Video Communications, Inc. (NASDAQ: ZM) as an IPO, you were probably feeling pretty smug as of last week.
But then if you’d heard Facebook’s news that it would start offering free video chat for up to 50 people, you might think “hey, it’s a good time to dip out and take my profits.”
It seems like plenty of people holding positions were thinking along those lines. Following the Facebook news, the stock dropped from about $180 to $160 in the last two hours of trading on Friday.
Does this mean Zoom is going out of business? Nope.
I love Zoom. But if you look at the chart about when Facebook announced that news, Zoom experienced what I call the death candle. It was like Facebook said, “we’re crashing your Zoom Happy hour!”
The market’s moved by emotion. It’s not logical. It’s not rational. If you try to make sense of the markets or trading, you’ll lose your mind. I promise you that.
Heavily Shorted Stocks = Opportunity to Go Long
In last week’s webinar for STT Pro members, I said, “if all you did was trade INO last week, you had a pretty good week.”
Inovio Pharmaceuticals, Inc. (NASDAQ: INO) had a NICE bounce off of red to green. This was basically a dip and rip … one of my favorite patterns.
It was up several days in a row … Based on what I saw on Twitter, it was heavily shorted by idiots. They’re sure it’s gonna fade. But what do they do when it breaks the previous day’s high?
It’s a panic point — and as everyone scrambles to get out, it creates a squeeze.
One of the great things about a stock like this? You don’t even have to be first in. Even if you’d entered at $13.50, you still had plays to make.
But don’t get complacent with stocks like this, long OR short. Things can change on a dime! Make your move and get out.
Coronavirus trades and plays are changing, but one big thing isn’t — the market volatility.
Trading in a volatile market is kind of like playing a game where the rules keep changing. You need to keep a level head … and don’t try to predict what’s gonna happen next.
Maybe you’re not accustomed to volatile markets like this. Maybe you’re new to trading. Either way, there’s a resource that can help bring you up to speed on this crazy market.
I just contributed a segment to an incredible NO-COST two-hour guide released by my trading mentor and friend Tim Sykes called “The Volatility Survival Guide.”
This guide is perfect for helping you acclimate to the crazy volatility in the market right now. And the lessons you’ll learn can serve you in any volatile market conditions in the future. Marijuana stocks, bitcoin … whatever.
Learn important tips about trading in an irrational market — and how to make the most of the StocksToTrade platform to find amazing trading opportunities.
The market’s not rational right now, but that doesn’t mean you can’t be level-headed. This guide can help you get in the right mindset. Get access to “The Volatility Survival Guide” here!
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Keep Surviving, Keep Thriving
While you may have settled into a reliable stay-at-home routine, there’s no room to become complacent as a trader right now.
The coronavirus has created an incredibly volatile market. While this is creating tons of exciting opportunities, you’ve got to be adaptable to make the most of them. If you’re not able to stay on top of what’s going on, you risk being left behind.
Be smart and stay safe. Keep researching the market and updating your watchlists. Be ready to pounce when opportunities come your way.
How have you noticed coronavirus trades changing? Leave a comment and share your experience!