After weeks and weeks of the stock market running dramatically up the hills and approaching pre-crisis highs today, the market got beat down like a rabid dog, over five percent down with the Dow plunging nearly 1600 points for its worst day, worst day. In nearly three months, we are seeing one of the biggest one day losses since March. If you compare all of the drops during this crisis, this ranks smack middle with the worst days at the beginning when we had the original massive beat down and we had lockdown started and we had widespread hysteria. But why why Charlie would this happen? I thought the market was only going to go up well.

There's a combination of deprecating factors here. Number one: bearish sentiment from the Federal Reserve. Number two: a stock market that too quickly factored in a complete recovery and thus was more apt than not to go down on any signs of weakness. Number three: fear of new outbreaks and reports of outbreaks coming back and the different fears with more lockdowns and heightened restrictions on economic activity and to a lesser extent the backdrop of joblessness claims increasing even if it is at a slower pace.

But in this video, we are going to be violently breaking all of this down and talk about exactly why why this drop happened and what you can do to make money. Because as traders, we like making money. But the only thing that I ask before I get into this is that you hit that ravishing like button for ravishing analysis. You must give some ravishingness back.

Okay, well to start you need to understand the context of the situation. The big Old Fed. So the Fed has played an unprecedented role throughout this crisis. and just yesterday, the Fed announced that they had decided to leave interest rates near zero, and their economic forecasters projected the unemployment rate falling to as high as 9.3 percent, even at the end of this year 2020..

But the worst part here is that even at the end of 2021, they're only projecting a fall to 6.3 percent if everything goes as planned. And if you match this to the reality of the stock market just for context, last time, we were trading this high in the market back in January. From this year, we had an unemployment rate at 3.6 percent, but the Fed is projecting that even at the end of 2021, we'll still have nearly twice that many people unemployed at 6.3 That's the end of 2021, folks, not 2020. But actions speak louder than words, and the Fed is now signaling that interest rates will stay near zero through 2022.

And I can't help but be reminded of the early days of this Corona crisis where the stock market wasn't sure where to go. It was a little uncertain sally and then all of a sudden the Fed decided to take really, really aggressive action and the market sold off. Investors saw the intense cutting of interest rates to near zero percent and the infusion of capital as extremely intense measures to be taken. And this rattled the market as they wondered about what the incoming storm would bring.

The analogy that I'm going to make with this is when you're a kid and you fall down on your face. right? If you're kidding, you're running. you're going on a bike, you're jumping off rocks. I don't know what kids do these days, but you're doing something and you fall down on your face.

You don't know how bad you feel, right? You don't know because you just fell and it's on your face so you don't really know how bad you feel. Maybe there's blood coming out of your face? I don't know, but you don't know how bad you feel. but you can judge how bad you fell by the look on your parents face and your kids. so you look up at their face.

Maybe you're crying a little bit because you're a little baby, but anyways, you're looking up at your parents face and if your parent looks really, really shocked, you know it's bad. But if they look calm, you're going to assume that it's not that bad, right? The Fed's actions during this time were essentially a shocked parent and investors took that to mean that we were in huge trouble. But as the panic settled, states reopened and some people went back to work, the market settled in and eventually regained so much momentum, it started getting closer and closer to pre-crisis highs. But this run-up also created a deeper issue.

The realization of too much upside left us subject to much, much more downside, which is all fine and dandy if the economy is roaring along and things are getting back to normal. But now that the Fed is once again looking at the market with a shocked face, investors are worried. They are worried about what it means. They are worried about what it means for companies to have an unemployment rate and perhaps a decline of income until as far as 2022..

they are worried about getting stuck in a flailing market. But the truth is that in reality, as traders, we know that the market, well, it always ebbs and flows and so does the economy. People always factor in excitement or factor in fear, and that's why these huge huge moves happen. But realistically, as traders, this beatdown today is good news for us.

As stocks get beat down, we have tons of clean opportunities to trade off of Spxs which shorts the S P 500 ran up nearly 15 percent today, Schviks ran up nearly 40 today, Sqq 11 and these are just three great opportunities that we often cover on this channel that allow you to play Fear and Down trending in the overall market. And by the way, if you'd like to keep up to date with the instruments that we use to play both downward and upward directions, we do post them every single night for free in our nightly zip trader circle watch lists, so check them out there if you're having a hard time finding picks. But moreover, sell-offs are a great opportunity for swing trades as well. We often talk about how the worst hit sectors in any crash are often the ones that are the biggest gainers soon after.

Because of all that new upside, take Carnival, for example, Ccl Carnival got beat down to crisis lows at seven dollars and sixty cents and then more than tripled in the next month. Obviously, it didn't recover that much overall when you consider where it was trading at before. But that's because the industry is devastated, right? It's devastated, fundamentally. But the point is that the sectors that get hit the most have the most realizable upside.

And like we talked about back in our Bicarnival Cruises at 12 video where we discussed buying into 12 back in early April, most people would have said that you're pathetic for buying a stock that has gotten beaten down so much and is in such a devastated sector. They would have rather had you invest in Amazon at that time. And sure, that would have been a safe bet and you would have even gotten about 10 of upside. Amazon was a huge winner in this crisis, right? But that's ten percent of upside.

But Carnival, on the other hand, if you compare this to Amazon, Carnival was a three hundred percent increase compared to a ten percent increase. If people had asked you like, oh, what stock should you buy during the middle of this coronavirus crisis, people wouldn't have said Carnival right. But obviously the stocks to get beat down the most have the most upside potential, right? They're more apt to moving quickly. So in any case, my two cents here are to trade off downward direction days and to scout out opportunities that are hit the hardest as we see this new crash.

But anyways, to wrap this all up, the issue with trading so high trading where we were trading at earlier this year pre beer Bug is that we are at this point where we've been before in the stock market treaded these waters before we've treaded them, folks, investors knew we had the potential to get here. Our economy has been at a place before to support this, but the thing is that the stock market is based on an idea, a future speculation on how our economy will do in the future. and right now it's all guesses as to when the actual economy will match what it did pre-crisis last time we were at these levels, and as it appears that this picture of economic recovery looms closer or farther away, today, it looks like it's farther away. We are going to see a tug of war between the bulls and the bears.

I'm sure that in a few weeks there's going to be more conversations about different positive catalysts, and then there's going to be more negative catalysts. It's going to ebb and flow, folks. and this is the reality of the stock market. But it's important to note that fear is a really real thing.

We are still in the midst of a crisis, and we know that this crisis has taken us as low as this before. so there's a lot more downward potential to crisis lows than there is upward potential to pre-crisis highs. And that is saying something for a economy that's recovering in a stock market that people are trying to invest in at a dip. We're not really that close to a dip, right? We're pretty high up if you actually look at the overall picture and you compare that to our economy.

But as traders, it doesn't really matter, right? Because we trade off intraday and few week long price action, It doesn't really matter if we're like, oh, I want to time the market. No, there's no need to time the market, you just trade. You create high probability setups, and there's a lot that can happen in the next few months that can drastically change the course of this market. So we need to be all ears, all ears folks and follow current events to inform our trading decisions.

Anyways, folks, I hope this video was helpful. If you have any questions you can let us know below or join us at Zip Trader Circle let us know what you think about this crash down below. Do you think this analysis belongs in a zoo with the bears and monkeys? Well sure let us know down below and quick plug If you are looking to learn how to trade, we are still offering 50 off when you type in coupon code stay Home 2020 At checkout you can learn more about Ziptraderu by clicking the link in the description below. And lastly, if you're wondering what broker, just what broker Charlie should I be trading these stocks on? Well, the broker that we like to send new traders is Weeble.

They have pre-market and after hours trading, which is just great because a lot of the movement happens in the pre-market and after hours. Weeble is also commission free and it's very very user friendly for folks who are new to trading and would like to get started as quickly as possible. So anyways, if you are interested in signing up, all you have to do is click the link in the description below and you will get not one but two free stocks when you both sign up and deposit. Anyways, folks have a great day and I'll see you in the next video.