Lessons From the Market Crash
Dear Penny Stock Millionaire,
It finally happened — the stock market crash I’ve been warning students about. After shrugging off coronavirus fears for two months, the market’s plunge was steep.
Typical buy-and-hold investors whine that it’s the worst week ever… Meanwhile, some of my students are reporting killer gains.
I’m getting slammed with questions by students and non-students alike. Which is why I want to go over the stock market crash. I can’t keep up with all the emails and DMs.
First, let’s look at how it all went down…
Anatomy of a Stock Market Plunge
Last week was the market’s worst week since 2008. Feb 27th was the worst day ever. (Based on points, not percentage.) The 28th traded much the same as the 27th — a lot of volatility and big swings.
Take a look at the S&P 500 two-year chart below.
SPY chart: 2-year, daily candle, stock market crash of 2020 — courtesy of StocksToTrade.com
During the market correction at the end of 2018, it took three months for the SPY to drop 19.7%. Now look to the right on the chart. The SPY dropped 11.2% in one week and was closer to 15% until the final 15 minutes of the trading today.
A lot of people are messaging me and asking, “What should I do? The Dow’s falling off a cliff. The Nasdaq is tanking!”
Then they wonder if I’m freaking out. I assure you, I’m not. And none of my top students are freaking out, either.
Why I’m Not Freaking Out Over the Stock Market Crash
The funny thing is most people are freaking out. But it’s not funny that most people are losing money.
When the market plunges like this, most people lose money. But I’ve been warning about it for months. Frankly, I underestimated how far the market would go.
This correction is necessary — but a lot of people are unprepared. They thought the market would go up forever. That’s just not the way it works.
Wanna know what’s really cool? My students are reporting…
Record Trading Days
Seriously. While the overall market tanked yesterday and people freaked out…
Many of my students reported their best day ever.
Put that in perspective. The Dow’s single worst day ever… and many of my students’ single best day ever.
How does that happen?
Hot Sector in a Stock Market Crash
All the news about the stock market crash focuses on the coronavirus. I said in one of my recent posts that I was surprised how the market shrugged it off. But I also said that if it continues to spread we could be heading for an even bigger fall.
Turns out I was right. The sell-off started exactly a week later.
But this correction is also creating opportunities. While the stock market’s crashing, there’s a really hot sector for coronavirus-related stocks. My students and I have been watching this sector for weeks.
And we’ve been watching some of the stocks much longer…
Why I’m a Glorified History Teacher
Some of these big movers were in play years ago — during the Ebola outbreak of 2014.
I was trading Alpha Pro Tech, Ltd. (NYSE: APT) during the Ebola outbreak. Check it out…
In 2014, APT went from the $3s to roughly $12. Here’s the APT 10-year chart…
You can see the spike in 2014 — that was a big move. But this week was huge. The stock went from $3 to $41 in six days!
So when people are freaking out about the overall market, I take a contrarian approach. First, this is the hottest sector in months … if not years. Second, the correction is necessary. We’ve been in this bull market for 12 years.
So study the past. But also be willing to dig deeper. Let’s look at another big mover this week. It’s a great example of why…
Why I Get So Little Sleep
Most of the time I teach students to focus on big percent gainers.
But on the 27th, I called a stock based on pure research. The crazy thing is it became the biggest percent gainer in the market. I was just early.
Which stock? Check it out…
Dynatronics Corporation (NASDAQ: DYNT)
I researched like crazy to find this one. What was my thinking? Disinfectant spray. Sound weird? Check this out…
The Center for Disease Control suggests several preventive measures to avoid coronavirus infection. But only two involve using products. One is to wear a face mask. Which explains why APT spiked during the Ebola outbreak and again this week.
What’s the other preventive measure? Disinfecting surfaces with an approved/effective disinfectant.
Dynatronics markets and sells a disinfectant spray proven to be effective against human coronavirus.
I was right about DYNT. And I took a little profit. But I was SO early, it’s crazy. I picked the single biggest winner in the market — just a day early.
Take a look at the DYNT chart…
DYNT chart: 2-day chart, 1-minute candlestick, coronavirus runner — courtesy of StocksToTrade.com
I made 5 cents a share when there was $5 a share upside. I literally could not have traded it any worse. But I still made money and I was on the right track.
It’s OK. I’m not here to be perfect. If I was perfect, I’d be a multi-billion-dollar hedge-fund trader. I’m not. Sometimes I’m early… sometimes I’m late.
Still, a lot of people messaged me and said, “Tim, you had DYNT yesterday, you took profits WAY too soon. Bet you feel bad about that today…”
Dead wrong. Here’s why…
My strategies work. The fact that one of my students did better proves they work. More importantly, for me, trading is about teaching.
Running Bull or Stock Market Crash … Strategies That Work
The good news is that I’m a better teacher than most. AND I’m fully transparent. When I screw up I’ll tell you.
But my teachings work really well… especially in a crashing market with a hot sector.
It’s not random that my students are doing well.
Whether you believe me or not, these plays are here. It doesn’t matter if it’s the coronavirus now or a virus in the future. Or for that matter, another hot sector. It doesn’t matter if the market is crashing or running like crazy.
The Same Patterns Keep Coming
I’ve actually had messages from people the last few days saying, “I’ve never seen ANYTHING like this before!”
It’s not random, and it’s not luck. When people hate on penny stocks, I pull up charts like APT. Then I explain it’s the same pattern I’ve been trading for two decades.
And then I show them students who are crushing it.
Calling Out the Haters and Fakes
When haters come at me on social media, I always ask them which patterns and rules they disagree with. Is it cutting losses quickly? Or waiting until the first red day to short? Or buying the first green day in a sizzling hot sector like coronavirus
Know what? They never respond.
There are SO MANY people in this industry who are fake. It’s crazy.
For me, the beauty is that I’m real.
So every time something like this happens… a stock market crash… a sizzling hot sector… it doesn’t matter. I’m still gonna look for my patterns. And teach my students to do the same.
Learn Strategies That Work in Any Market
I’m not for a second suggesting it’ll be easy. You have to study. Hard.
I’ve been chronicling supernovas for two decades and teaching for one decade. So unless this is the first time you’ve read my blog, it shouldn’t be the first time you’ve seen plays like this.
Anybody who says this is the first time they’ve seen plays like this hasn’t studied the past. This game has been going on for decades — whether you realized it or not. And stock market crashes are nothing new.
Anyway, there are…
Too Many Plays to Worry About the Overall Market
Right now I’m overwhelmed because there are so many of my patterns.
And with all this volatility, more and more students are getting it. Even those in study mode… this is an amazing time to watch.
Burn it into your brain. It’s a great opportunity for new traders to learn the patterns.
Editor, Penny Stock Millionaires