The S&P fell 4.4% yesterday. Mine fell 2.4%. My takeaways...

Hey friends — Joe here.

📊 Trades on the Table lands once a week. One real position, why I opened it, and what had to be true.

Nothing here is advice. Just what's on my screen and how I think about it.

What a week for the US stock market!

On Thursday the S&P 500 fell 4.35% in a day.

Tech and AI stocks led the way down.

The Nasdaq-100 fell 6.5%.

The chip ETF, SOXX, fell about 12%.

The trend actually shifted days before Thursday.

Wednesday's bounce looked like relief.

But I think it was a window of opportunity: the election result gave the market an excuse to pump, and sellers dumped.

It didn't take the index back above its 50-day moving average.

It didn't push the 9-day back above the 21-day.

It didn't break the downward trend line I drew last week.

Yesterday, my entire whole account fell 2.42% on the day, about half of what S&P has lost.

That's the hedging via options working.

I run two books. Here are how the books contributed to the portfolio yesterday.

My Key Takeaways

I am convinced that technical analysis and trend spotting is a critical skill for investors.

Fundamental analysis tells you "what" to invest in. Technical analysis shows you "when".

The essence of investing is trend riding.

Being able to spot the trend is like being able to read the weather before fishing.

Not all trades are for profit, some are for protection.

On Wed, the day before the drop, I bought some QQQ Put options because I could see the selling pressure wasn't done, and I have big sector risk on Tech and AI stocks.

They cushioned most of what my tech and AI stocks lost.

I didn't buy them for profit. I bought them to conserve capital.

Have an exit plan for all trades.

I ramped up the LEAP call investment this year. The LEAP calls are the one part of Book 1 with no hedge, and they cost me -0.99% of the draw down.

I'm not closing them because when I bought them, the plan was to hold to expiry. If the businesses underneath stay sound, I only need the market to recover before then. I knew I am perfectly able to hold them through the volatility.

But Thursday showed me the hole.

Every investment should have an exit plan - i.e. the bottomline. Beyond the bottomline, I am out.

I've started thinking about how I'd hedge LEAP calls next time.

The worst is not over yet.

The 9, 21 and 50-day moving averages are all still trending down. The downtrend has firmed up, so more of it may come.

I would not be rushing in now to hopefully "catch the bottom".

I am waiting for confirmed signals that the downtrend is reversing. Until then: patient, and cautious.

And I hope you've added some protection of your own.

Lastly, a correction isn't the end. A healthy market needs them to keep growing. Looking back, we almost always regret not being more optimistic during a correction like this.

So stay cautious. Stay patient. Stay optimistic.

Keep growing!

Joe

This is a description of trades I personally made — not investment advice, and not a recommendation to buy or sell anything. Buying puts can lose the whole premium. LEAP calls can lose their full cost. Selling options, including same-day (0DTE) options, can lose more than the premium collected. Options aren't suitable for everyone. Figures are approximate, rebuilt from my broker's intraday snapshot and closing marks, shown as a share of my whole account, and rounded, so rows may differ from the totals by about 0.01%.