After more than eight weeks of stocks only go up today, the market just tanked with the S P 500 down nearly three percent at the time of filming this video. The Nasdaq is down four point three four percent and the Dow Jones is down about 2.16 Even the baby in this advertisement on the Cnbc website wasn't able to handle this draw. He saw the dip and was like hell no and passed out. His mother will wake him when stocks return to an uptrend.

But oh my Jesus. For those of us who were trading the open today, we had an over 14 run in Sqq which shorts the market, Uv Xy which trades off fear and volatility. And oh, do not get me started on Lab D. After just weeks of boring, stagnant monkey Market today, we had such a beautiful run in Lab D and it ran like 12 percent before cooling off.

But look at these runs. If this was my child, I would be such a proud father. And yes, for you traders who were with us back in February and March, you see selloffs like this and you say L-o-l How boring. Please just shut up and let me drink my tea in peace because this is really nothing compared to what we had in the beginning of the crisis.

Why? Because the market back here had days where it would literally sell off 9, 12, 5. So this is a walk in the park in comparison. But enough with reminiscing, let's go back to today. If you compare index by index today, you can quickly see a disparity between what stocks are being hammered the most right now.

The Nasdaq is down nearly twice as much as the Dow Jones, and it's down a third more than the S P 500.. Why is that? Well, it all comes down to composition. In terms of pure numbers: the Nasdaq is up 29 on the year, the S P 500 is up eight percent on the year, and the Dow is up about 0.00 on the year. You can already see a disparity and a pattern between how much these indices lost today and how much they're up on the year.

The indices that are up the most on the year are getting hurt the most when it comes to recent crashes. Why is that? Well, because your Nasdaq is much more centered around growth stocks. stocks that are based much less on actual current numbers actually based on how they're doing right now, and are based much more on forward-looking projections. Think Tech.

Think the biggest companies that benefited from this crisis during the beginning of the recovery, Tech took off more than all the other sectors and they usually had less pushback during periods of cooling off. But now that we are up so much on that sector, on days where money pulls out, we are starting to see people say, hey, you know what stocks like Apple that have nearly stagnant growth year over year in terms of actual revenue. Hey, maybe they don't deserve a 68 year-to-date return that equates to a trillion dollars in market cap. Companies that ran up billions in market cap in the span of no time at all and with no fundamental reason to run up.

Maybe that was pushing it a little bit. I'm not saying there were no reasons for these stocks to run up. I'm just saying that the idea that a lot of these companies valuations should double during a time where they don't have any revenue growth. I think that it's It's kind of asking for trouble.

But anyways, we're here to ask a few questions. What caused the market to sell off today? What can be expected moving forward? When will you hit that ravishing like button? And how do we make money off this Charlie? Well, in this video, all of these questions are going to be answered in a very ravishing way. So to start what caused this market sell-off Well, to explain this, we have to go back to the stocks that were hit the hardest today. and that's Tech 100.

But we have to stop equating sell-offs from all-time highs to sell-offs from all-time lows. When you see articles like Apple on pace for worst day since mid-march Totally leaves out the fact that, well, yes, it may be the worst day since mid-march but look at how much it's grown since then, it meant a lot more when it sold off here and took us back years in terms of valuation. But it means a lot less what it sells off here and takes us back like two weeks. And while I'm using Apple as an example, this is true.

amongst most of tech. right now. this is a crash that was largely fueled by cooling off in tech, but is also a byproduct of an increasingly volatile market. We know that the market has been fairly stagnant.

It's been a little stagnant sunflower for the last couple months. Sure, it has been going up. it's been itching up day by day, very consistently, which there's something to be said about that. But in terms of the volatility that we had in the beginning of the crisis, this is a whole different rodeo.

However, this started changing. in the last few days. we started seeing stronger increases. We started seeing Uv Xy, which measures volatility pick up after cooling off for quite a while.

When Uv Xy goes up, that means the market's getting more volatile, implied volatility is increasing into the future. And it's also true that when you have increasing volatility on green days, it gives more fuel to sell off on red days. Just like how the more fuel you get on red days, the more recovery you get on green days. Back in the beginning of this crisis, the worst red days in the market were followed by the biggest green days.

But now that we are way up here, not only have we had this intensely hype fueled run, but now every time something bad happens, investors freak out because we are trading so high in terms of valuations. If you need any proof of this, if you need any proof of this, the proof is in the pudding. Look no further than how airline stocks perform today. If you look at Jets, which is an Etf combination of all the main domestic airlines we see, it's slightly green, but basically flat on the day.

Meanwhile, the overall market and especially Tech, it's totally hammered. Why is that? Well, because airline valuations are still damn low and nothing happened to make it any better or worse overnight. So that's why it's very flat. If the news that tanked the market today was more about actual problems or actual structural issues in the economy affecting all sectors, this would have affected low valuation stocks as well.

Yet they've barely budged. But with Tech in many of these broader market stocks, there's just so much winning pre-factored into these valuations that the market just can't help but cool off at any sign of trouble. I could easily be a monkey media analyst and make a headline today that says tech gets destroyed while airlines stay strong. but that wouldn't take into consideration that airlines are trading like 50 down on average and Tech is at all-time highs.

That's why context is everything when it comes to the stock market. If you have valuations that are wacky, you open yourself up to crashes that are just as wacky. But it's also important to stop obsessing with this idea. this flawed idea idea that somehow when the market crashes, it has to be due to some fundamental reason.

many if not most crashes are actually made in the run-up. The mistake is the run-up not the crash. The mistake is the run-up. The crash is just a symptom of people over buying something.

but let's take this on just an individual level if you look at zoom. We covered this earlier in the week. We made this a top stock on the Top Stock Sunday video and it ran up like 40 to 50 on a good earnings announcement. And literally nothing changed since yesterday and since the day of the reaction.

Yet today the price fell 10 and yesterday it sold off quite a bit as well. But nothing changed. So why is this the reason for this is because people over buy good news, they over buy run-ups and then when the good news settles in, it sells off. But the issue here wasn't Oh my God.

it crashed. The issue was it ran too much. The problem was created here. Not here.

It's the same thing with the broader market. Selloffs in the broader market do not absolutely do not have to signal a new negative market catalyst. It can just signify people being stupid enough to overbuy stocks to the point where it gets to this level of valuations. And why else do I say this? Well, if you look at the catalyst, the typical catalysts that have hurt the market this year such as an outbreak in cases, well, cases, have been on a solid downtrend for weeks.

If you look at vaccine hopefuls, well, day after day we were bombarded with new news that a vaccine is likely to come out. And if you ask your average American, many are seeing this health crisis calm down further over the next 6 to 12 months, whether we get one or not. Whether that happens or not, I don't know. but this is what your average American is thinking right now.

So the fact that the most overvalued stocks in the market sold off the most combined with the fact that the most beat down stocks on the year barely budged. combined with everything I mentioned before, this leads me to believe that today's sell-off was purely based on the hottest sectors just simply cooling off from all-time highs. And I think that it is still way too early to say oh, this is a new trend where the tech bubble just pops and takes the market. I just think that one day's bad performance is too small of a sample size.

And yes, there aren't many catalysts lurking under the surface such as jobs, numbers, election volatility, a pushback in the vaccine race, or a push forward in the vaccine race. But it's too early to call a trend, and I would be equally unsurprised if tomorrow this completely corrects, or if tomorrow it continues crashing. It's just it's one day's price performance, And honestly, as traders, it's not our job to predict overall trends, it's our job to trade what is given. But here is how we're going to make money off it.

Well, first of all, massive downtrends are pretty much gold rushes for us as traders. That's because instead of going on a wild goose chase to chase just one or two big kickers, we instead get to short the entire market and trade off the fear. And that's why I put in our trade targets for our Ziptrader You members to trade Spxs, Sqq, or Lab D. When the market goes down, these tickers short different parts of the market and look how they perform today: Spxs, Sqq, Lab D.

And if you look at our primary focus tickers in our free nightly watch lists in Zip Trader circle, I added Uv X Y, and Svxy back last night after a hiatus, and this is because yesterday, Uv Xy started creeping up massively in anticipation of volatility and as the market grew a little bit more volatile. And likewise, today, Uv Xy ran up massively. But look at what this had indicated beforehand. So here's my suggestion: Have a plan in place to be prepared for all outcomes, but also understand certain factors.

Certain elevating factors that lead us to believe a certain outcome is more likely. Okay. It's no secret that I quietly root for the market to sell off. A lot of people think that I'm a monster because of this, and I like people just losing money.

Well, now, I actually like the market to sell off because I'm lazy and greedy and I trade like a spoiled brat. Simply put, it is easier to make money when the market is in death mode. But it's also true that on the rebound from death mode, it's also easy to make money. This is an easy money period.

So yes, I'm biased and would like to see the market selling off more. But again, on days where you see these abrupt sell-offs, your mind needs to immediately click and say, Sqq, Spxs, and Lab D. Be prepared with those. But in terms of forward-looking analysis, we are in a period where in terms of taking everything into consideration, we didn't really sell off that much.

This isn't necessarily an indication of the next big crash coming, and after all, we had a few day sell-off back in June and it just recovered again. But the truth is that now look at where we're trading. we have more room to fall even to get back to pre-covered highs. The only thing right now that this sell-off is signaling, in my opinion, is a more volatile market.

It's signaling a change in the way that the market is functioning. It's signaling that hey, maybe this consistent growth that slowly goes up day after day after day. it's telling us hey, maybe this is about to change And that's why I'm going to have more of a focus on Uv Xy if you remember back to the beginning of the crisis, I was known for being the guy that kept talking about why I was buying Schviks again and again. Back then, Schviks had run up from 38 to 1 000 as fear and volatility in the beginning of the crisis ran to all time highs.

but Schwix ended up getting decommissioned rip Schwix. But we are now using its alternative Uv Xy, and I'm taking today's run as a signal of increased volatility into the future. And even if this signal is just a quick blip in the overall trend of the market, we still have this huge opportunity with this volatility. As we're entering this arena of high valuations, and obviously, we're still struggling with this health crisis and we're getting close to a presidential election.

Traditionally, even in times where everything else is going well, presidential elections almost always fuel heightened volatility. If you look back to 2016, implied volatility indices ended up rising quite a bit around the election, and that's something that in a vacuum would cause Uvxy to go up. But with all that's going on, I'm very, very bullish on the way that Uvxy is going to look over the next couple months. But again, Uvxy can sell off and then Svxy goes up.

and that's why you want to make sure that you're trading the proper direction in these anyways. folks, I do hope this video is valuable to you. If you have any questions, feel free to reach out to us. In the comment section below, remember to trade like a spoiled brat.

The market. Well, it doesn't care about you, so don't try to care about it. Make sure you're trading like a spoiled brat. You're only taking the best of setups.

And lastly, if you are looking to learn how to trade if you want to be forged into a trader, we are offering 50 off if you type in Stay Home 2020 before checkout and that link is in the description below. Anyways, folks, have a great day and I'll see you in the next video.