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Why Every Trader Needs a Downside Hedge This Week
Two major upcoming events are big drivers of the world's global liquidity for the coming months. How does this play into the markets, and how are traders reacting ahead of the events?
Come join me as we dive in and see what’s moving!
Plus, as always, we have stocks popping and dropping so come find out what is moving this morning as I look for stocks and do some live premarket analysis on SPX, SPY, NDX, QQQ, Russell, IWM and other stocks that are potential plays for the day.
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Upcoming Market Risks: Why Every Trader Needs a Downside Hedge This Week
As we head into a week stacked with economic and political events — the upcoming FOMC meeting and election, to name a couple — the market feels primed for some potential turbulence.
There’s a real chance for a pullback in the near term, and being prepared with a solid protection strategy could make a big difference for anyone looking to weather the possible downside.
First off, it’s not about going all-in on a bearish position…
Rather, it’s about being tactical with a safety net in place. Personally, I’ve already added a layer of downside protection ahead of next week’s anticipated FOMC meeting, where the Fed is likely to make waves with another rate announcement.
In fact, even though this potential rate cut may feel like it’s just catching up with the market, the event will likely influence short-term price moves across multiple sectors.
To prepare, I’m considering adding another hedge early next week — Monday or Tuesday — stay tuned for what I end up doing.
There’s a case to be made for building in multiple layers based on varying market conditions. Right now, I’m eyeing everything from major indices to individual stocks like Amazon (AMZN) and Microsoft (MSFT) to set up for potential short-term plays, with specific entry points in mind if we see a pop back up before another decline.
Let’s not forget — this period could just be the calm before the storm. If there’s one thing we can count on, it’s the market's ability to catch traders off guard.
Whether we see a quick pop to new highs or a more drawn-out dip, having protection in place is about maintaining flexibility. After all, there’s no room for complacency in markets like these.
Consider keeping a close eye on liquidity trends, as a flush out in global liquidity could pull U.S. markets down with it. With the potential for multiple rounds of downside, a well-timed hedge is less about “if” you’ll need it and more about “when.”
By layering in targeted protection, we give ourselves the chance to stay agile and capitalize on those moves — without getting sidelined if the market takes a surprise turn.
As always, stay prepared and ready to adjust, because when the market makes a move, it rarely waits around. This isn’t about making a bet…
It’s about having the right tools in place when things get bumpy.
Today’s Daily Chart Setup: Healthcare Services Group (HCSG)
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