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New Month, New Quarter, New Half - The Coach's Playbook

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Famous last words - The second half of 2020 couldn’t possibly be any crazier than the first half. Don’t count on it, right? Well, with virus fears ramping up, several states rolling back their reopening policies, and a presidential election on the horizon, nothing’s impossible at this point.


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Some Things To Watch

So, what should we be looking at to get a sense of direction for these markets? Something that you should at least be aware of that not all day trader keeps track of is what portfolio managers are doing at the end of every month, quarter, or year. If you’re one of those traders, you might want to think about adding rebalancing activity to your market watchlist.

In its simplest form, rebalancing occurs when money managers start shifting assets to realign their portfolios. So, if you want to manage risk by keeping a constant balance of 50/50 between two stock sectors and one sector outperforms to the point where your balance shifts to 60/40, you would then sell some stock to reestablish the 50/50 balance. Professional fund managers have huge portfolios and rebalance on a large scale, so it’s something to keep an eye on.

Some Other Things To Watch

The Nasdaq closed out its best quarter since 2001 and Gold futures are above 1800 for the first time since 2011. The markets are moving at a time when they’re typically very quiet. This isn’t completely out of the ordinary, but there are a lot of moving parts holding things together and it can turn heavily volatile very quickly. We saw it happen in February, don’t think it won’t happen again.

With mounting Covid-19 cases continuing to make new headlines, it feels like we’re about to go back into lockdown mode. We’ll find out soon enough whether or not that’s going to happen, and either way, it’s going to have an impact on all kinds of economic data. Bottom line; there’s another big move waiting around the corner, so keep some powder dry and always trade for tomorrow!

Trade Well!


Posted by TopstepTrader on June 30, 2020
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