Don't Panic! How I Trade During a Stock Market Crash
In a Nutshell
Markets are oversold with QQQ facing potential pullback to 700 amid geopolitical tensions, oil spikes above $107, and South Korean memory chip selloffs. Traders caught the dip in live session but remain cautious ahead of this week's CPI data, which could shift Fed rate expectations. Profit trimming and leverage reduction at overbought levels is advised as markets near all-time highs.
These notes were generated by AI and may contain inaccuracies.
NASDAQ is currently down 0.73%. The trader does not carry shorts overnight, so does not benefit from gap downs at market open. Markets are technically oversold on the day, but there are specific reasons for today's selloff. Markets can still go lower despite being oversold.
On the larger timeframe, QQQ has significant pullback potential to previous lows of 700. This week includes CPI data report and PPI data report, with the consumer price index report being most important. The CPI will indicate whether inflation is rising or falling without changes in calculation methodology.
The Fed rate monitor tool currently shows a 20% probability. This could jump to 50% if inflation comes in higher than expected. Markets will most likely react based on the news.
Microsoft reached a $4 trillion market cap based on news of releasing a possible competitor new chip. This is positive for Microsoft but negative for Nvidia, which is down 1.5%.
Brent crude oil surged above $107 a barrel. Ukraine's President Zelensky accused Russia of striking six Ukrainian energy facilities, with Ukraine retaliating. Iran reported its third crude oil super tanker was hit, causing fires in the Strait of Hormuz. Escalations in the Middle East continue, causing markets to derisk.
Trump stated a few days ago that there was a full ceasefire between Russia and Ukraine, but hours later they confirmed attacking each other. This suggests no respect for Trump's word or indicates another Trump lie.
The South Korean market is plunging and has huge influence in the memory chip space. SK Hynix, Micron, and SanDisk are all selling off aggressively. SanDisk was down 7% and is now down 6%. Micron is down 3.7%. SK Hynix is down 4% and appears weakest of the three.
MU broke below $1,000 after reports that China's CXMT plans to launch new server memory by year end using design that packs more memory into smaller chips despite US equipment restrictions. More supply will likely serve China's own data centers first. The bigger risk is long-term DRAM pricing rather than immediate threat to Micron's HBM business. This could become a supply issue in the US if there's oversupply that undercuts Micron's prices.
During the live trading session with the LPP team, the team caught the market selloff, bought the dip, and saw direction turn from bearish (lower highs, lower lows) to more favorable after confirmation. However, the trader is not fully convinced of a full recovery, especially with CPI data report coming up this week.
Be very careful buying in too early expecting markets to recover right away when they can derisk the day or hours before the CPI data report. Be careful and calculated. Zooming out shows bigger pullback potential to lows of 900 for QQQ. NASDAQ could see overbought reversal to lows of 700. Markets are incredibly overbought, nearly at all-time highs.
A small correction doesn't mean panic selling everything. Hopefully in recent days, profits have been trimmed and leverage reduced at overbought levels in preparation for pullbacks. The team will go live for the CPI data report to see how it influences the FOMC rate decision in two weeks.
LPP subscription is currently on October sale at $1.30 a day. The second link in the description provides access to live trading sessions.
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