After lots of time and pretty much nothing fun happening, the stock Market today went whoops and got beat down like a rabid dog. Of course, as traders, this is fantastico. At the time of filming this video, we had the S P 500 down 2.61 percent, the Dow was down 2.69 percent, and the Nasdaq trailed those down 2.31 But what What is actually tanking Charlie? Well, everything pretty much, but the biggest losers are energy, healthcare, financial services, and industrials industrials. But this is amongst continued reports of beer bug spreading and a reported 30 surge from a week ago.

It's also in a time where we are seeing some states re-escalate their restrictions and investors are getting spooked that this is going to be a reversal trend. So shortly after we were getting our economy back to work. It's also amongst reports from the Imf saying that even as late as next year, we'll have sluggish turnaround. and it's among domestic concerns that many Americans will lose the extra government aid when unemployment benefits end next month.

How will this actually impact consumer spending and thus the companies that, well, the money's being spent at? But I know these downward moves get all the eternal bears. giddy giddy. Literally every move backwards since March has resulted in people from all over screaming we are heading back to the bottom. Wow.

But hey, maybe we are. Who knows. but you understand why bad news has such an impact on a market that's already been through so much. You need to know that we are in the middle of one of the best quarters since 1999..

since the market is factoring in insane growth and recovery, it cannot help but react massively if anything throws dirt on that picture. But you need to know that as traders, we love market beatdowns. It makes our mouths water. I always hear virtue signaling from people who think we as traders are dirty pigs for making money and exploiting fear when everyone around us just seems to be happy losing money.

But all I have to say to these allegations that were dirty pigs is Oink Oink Oink Oink. But anyways, in this video we are going to be talking about just what this beatdown means, how we as traders use beatdowns to make money and of course how important it is that you always hit that ravishing like button to which the answer is of course it's very important by the way, I have to share this with you. One of our zip traders just sent me this trade like a spoiled brat water bottle. So now not only can I trade like a spoiled brat, but I also drink like a spoiled brat.

The only problem is that it's not see-through so I'm probably going to get a ton of fake sip allegations. Okay so to start context: way back in the beginning of this crisis, reports came out of beer bug, blah blah blah. We all know the market tanks lockdowns are implemented and people assume the worst. Then slowly fear starts settling in.

the market recovers rapidly and is quickly sped up later on when actual reopening of economy starts and people get back to work slowly. Then all of a sudden we have protests, heightened fatigue of the crisis, and a general sense of apathy towards the Beer Bug and it gets a lot less attention and the market gets more infusions of capital. It's at this point where many Americans, whether they are working or not, they start feeling signs of a recovery and more people regret missing out on this move. so they continue buying in, Hoping this run will last forever.

But then all of a sudden we get bombarded with reports of rapid increases in cases, but the market stays pretty flat overall. It's at this point where bears are yelling Corona and bulls are yelling but gains. So market sentiment here can largely be summed up by balancing fear and greed. They're not more scared of spikes than they are scared of missing out on more gains.

so it kind of balances out here. But as case, spikes get harder to ignore and states start implementing some actions. The Bears ultimately won today. But Charlie, you idiot.

The cases the media is reporting, they're just trying to scare you. It's not legit. Well, regardless of whether or not you agree with the media on cases, it's undeniable that the media has a huge impact on mass psychology, And mass psychology is what ultimately drives the market. And as traders, we follow the market.

But anyways, what do spikes in cases directly mean for the market, and why is this a problem? Well, putting aside the obvious, let's look at what sectors of the economy are reopening and are growing the fastest in the current context. So, as we reopened in the last few months, we've seen an increase in driving walking in transit, we've seen an increase in restaurant bookings, we've seen an increase in hotel occupancy, we've seen an increase in air travel albeit a bit slower, and we've seen a breakout of home purchases year over year. And of course, all of this makes sense because sectors that have been hit the most have the most to gain if we reopen. Logical, This increase in activity has caused an increase and a rebound of capital into energy and oil, which are huge factors of the market, but also into smaller industries like hospitality and restaurants, causing a rebound of jobs, causing a rebound of spending, and causing sort of a spiral effect where people are getting back to work.

But let's make the switch from the economy to the market. It's also true that these sectors, the sectors that have been hit the most by the deer bug have the most to gain if it disappeared for example, let's just say the beer bug completely disappeared tomorrow, which stock is more likely to double Apple which is at all time highs, or American Airlines which is trading at about half the price it was at at the start of 2020. If the beer bug completely disappeared, there is no beer bug and everyone's just going back to normal. Which one has more to gain immediately? they both probably would gain, but one would gain a lot more in the immediate future.

But building on this, the reverse is also true. What stocks are going to get wiped out first if the breakouts and new restrictions start coming into the picture? And I know that a lot of people are like but Charlie the government is telling us that we won't have new restrictions. But right now investors are looking at where we are and reminiscing about the last time, where the government was trying to play down beer bug case increases and what actions they need to take. Government officials insisted back then that they wouldn't impose restrictions up until the very last moment where they actually decided to impose restrictions and I'm not making a statement on whether I think they're going to restrict us or not.

I'm just saying that as an investor and as a trader, you have to look at the facts and regardless of whether or not new restrictions come, case increases and fear spread will cause people to be more resistant to doing the very same economic activity that causes the economy to rebound in the first place. And yes, our economy right now is very much being fueled still by tech. tech. is a huge driver in this right, and Tech has done really well throughout this entire crisis.

But it's also true that when you have increases in spikes, when you have increasing fear in the market, this drives capital out of the market and creates the scenario where you have an environment that's very, very ripe for volatility. Okay, so now you are up to speed on the happenings of the market, but let's dive into what you need to do to make money in this environment. So the number one reason we as traders love downward days is because it's so much easier to make money. Okay, maybe easy isn't the right word, but we'll go ahead and say straightforward.

It's a lot more simple. On upper days or flat days, there are tons of different tickers and different drivers of the market, and we have to figure out which ones have the highest probability setups. But on abrupt downward days like we had today, we can shorten that list to just a few great tickers. For example, Uvxy or Uvixi, which is our fear index.

we'll call it Uvixi went up 15 midday as the market was rattled. Schwix, our old fear index also went up quite a bit. But for those of you who haven't heard, Schwix is actually going to be delisted in July, and I've been making the switch over to Uvixi as they essentially track the same thing. No reason to use Fix anymore because they are going to be delisted.

But anyways, you can play off fear. You can play off uncertainty with Uv Xy. And by the way, a lot of people think that Uvxy just shorts the market. That's not really true.

It does tend to go up when the market goes down, but that's just because fear tends to correlate with the market going down. Uvixi actually tracks Fix, which essentially tracks implied volatility in the overall market. So the biggest factor that drives you vixen is fear, fear, implied volatility into the future uncertainty of where the market's going usually downward uncertainty, and that's what motivates you, Dixie. But you can also play funds that short the market directly Sp Xs.

And that is why we talked about Spxs and its inverse Spxl on Sunday's Top Stocks video, and Spxs was pretty damn clean this morning. we opened in an upper direction above our red directional Sma line, got our confirmation hither, and then ran up until validation here. For those unfamiliar, our goal as traders is to play probability-backed moves, and that means buying in when we are above our Sma line aka at confirmation, and then selling out when we break under it aka validation. Of course, there's a lot more to it than that.

There's deprecating factors such as over buying, lower in volume, seizing direction, and so on, and so forth. But it's very, very important to understand the mechanics, and these are sort of the mechanics of how we trade. but in terms of the actual instruments that we trade, I've been preaching the wonders of fear and inversed funds for months, and honestly, since I traded my way out of the womb, these are my go-to and Bread and butter plays when it comes to downward direction days. But of course these aren't the only opportunities.

and it's important to be open-minded to tons of different opportunities in a market condition that's made up of many stocks that have recovered to all-time highs and all-time optimism. The best way to play dips in this sort of scenario is to acknowledge weakness, weakness in the market and then look at the bigger picture of what's going on. I do often see tons and tons of people use each of these selling opportunities to buy the dip, and that's actually been working out quite nicely for them. And it's true that some of the worst days will be preceded by some of the best days due to the rebound effect that's so apparent in the market.

But you see the problem is that that strategy only works when the market recovers shortly after, right? And while it looks like a great strategy in hindsight, eventually, if the pattern breaks, you will lose your lunch, so you need to be able to control your risk. So instead of just blindly buying the dip each time we have a sell-off, my suggestion to you is to curtail, curtail, violently, curtail your dip buying to stocks that are dipping massively much more than the overall market and are showing signs of a recovery. If you're limiting your dip bias to this, you have a lot more probability for success. That's because the worst days of crashes have always tended to be followed by the best days of overreaction.

And this is very, very, very true if you take individual stocks instead of the overall market. But for example, on one of Aal's worst days, it plunged, only to be followed by a complete reversal a few days later. It then validated out and continued selling off. But the point here is that it didn't really matter for the direction of the overall stock or the overall market.

Yet, we still had the opportunity to play our favorite confirmation to validation. We still had the opportunity to play that overreaction correction a clean overreaction correction. And since we can't magically predict the direction of an overall stock, this is extremely helpful. But there are even more consistent patterns to follow.

For example, Mu has a pattern of getting beat down rapidly and then recovering rapidly. This is also called the comeback pattern where you can literally buy in it, oversold, and literally just hold out until overbought and make a profit. And that worked historically each and every single time. And of course, this is one of those things where you'd have to manage your risk for when the pattern inevitably breaks.

Lots of patterns look good in hindsight, but the whole goal with these is to acknowledge the pattern and then wait for a pattern confirmation and then control your risk if that pattern goes bleak. The point is that if you are focusing on stocks that have a pattern of getting beat down ahead of themselves and a head of the market and then recovering rapidly after you have a huge opportunity on these downward dates. Just please folks, do not get caught buying into a single day dip thinking that it's part of a general uptrend and you can just buy the dip and it's magically going to keep going up. We, as traders cannot predict where the market is heading.

Sure, we can be fearmongers and say we are going back to March lows or we can be positive Paul's and say we are going back to all-time highs And sure, I have no doubt that in the next 10 years the market's going to go up massively, but in the short run, can't make the claim that stocks are going to magically go up or magically go down based on any sort of statistic right now, right? Because the short term markets are determined by the emotions of the masses. But what difference does it really make folks? Let's just play the fluctuations and leave the forecasts to the monkey analysts. Lastly, as we go through the rest of this week, we'll inevitably have more and more reports of cases. We also have a bank stress test coming tomorrow, and with more fear in general being combined with us still trading pretty damn high, there should be a lot of volatility for us to trade off of, but it's important to note that as cases increase, we're going to be back.

In a situation where focus may shift to the Fed for more intervention. And for context, the Feds stated back in March that they had 2.3 trillion that they were willing to supply to the economy in the form of lending programs. And this is one aspect of their overall intervention that's a huge amount of firepower. And to understand that number, we've only used about billion of that, or about six percent of that, and that's just on the lending side.

The Fed essentially has limitless firepower on many fronts, and they've been using it in an insane way throughout this whole crisis. And obviously there are short-term and long-term drawbacks to using this firepower. But the fact that the Fed is so willing to infuse more capital and strengthen the economy, this is something that you have to think about. But what what do you think about this current market condition? Let us know in the comment section below: What are you watching? What are your top stocks? What is your strategy to take advantage of this market? Let us know below.

But anyways, folks, I hope this video was helpful. If you have any questions, feel free to reach out to us below or join us at Zip Creator Circle. We also post our nightly watch list there, so if you're having a hard time finding stocks, you can go ahead and join us there. And if you'd like to learn how to trade, Zip Treater U is in the description below.

It's that first link and you can learn everything you need to know about what we offer at Ziptraderu by just clicking that link and watching the video intro and going over the course highlights. And lastly, do not forget to subscribe for more short, sweet and simplified videos on how to trade the stock market. Anyways, folks, have a great day and I'll see you in the next video.