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Posted October 26, 2020

Scott Stewart

By Scott Stewart

6 Ways to Play the Bearish Trend

Welcome to todays Rude Awakening

Were looking like well have a big down day today, since market open.

This makes for two full weeks of nothing but down.

We had one green candle in the mix, but overall, things are definitely heading in a bearish direction.

We are once again sitting right on that 50day MA.

All indicators are pointing to sell signals.

Two News Items Driving Markets

Earlier this morning, we heard from Speaker Pelosi and Treasury Secretary Mnuchin that we are NOT getting closer to an agreement on that stimulus bill.

And, Covid-19 infection rates are climbing to record highs once again.

The negative news is definitely playing a role in pushing markets down.

All this goes to say, traders should be looking for ways to play the market downside.

Thats exactly what Im doing.

Here are some key places you can look to do the same

6 Bearish Plays to Watch

First, well talk about an industry thats been hit harder than perhaps any other cruise liners.

With that, we have Carnival Corporation & Plc (NYSE: CCL), Royal Caribbean Group (NYSE: RCL), and Norwegian Cruise Line Holdings Ltd. (NYSE: NCLH).

All these cruise line companies are in trouble right now. They cant get their ships out for deployment, which means no revenue or customers.

And things are looking to only get worse rather than better. Not just because of Covid rates increasing, but also because of questions about the greater economy. Cruises are a luxury expense, not an essential.

CCL, RCL and NCLH are all down over 9% on the day.

Next up, a couple airline companies are facing more trouble than most, in a sector also taking a big hit since the pandemic outbreak.

Delta Air Lines, Inc. (NYSE: DAL) and The Boeing Company (NYSE: BA) both had down opens this morning. DAL is down over 5% already and BA down nearly 4%.

And, for one more big overall downside play, look at ProShares UltraPro Short Russell2000 (NYSE: SRTY). his is the Pro short position on the small cap index, the Russell 2000.

SRTY is up on the day nearly 8%, given the turmoil the Russell (^RUT) is seeing today.

Yesterday marks another trading day with a strong open, followed by a selloff to lower lows than the day before.

We are definitely in a downtrend in this bull market.

Trading the Trend

As I mentioned, we are still holding at the 50day MA. We have been here since last week.

It will be interesting to see if we can hold that level

Just like last week, we are seeing sell signals across the board on all our major indicators: Stochastics, RSI, MACD and histogram, all weak and pointing down.

Trade volume is also dropping off.

Volatility is still low.

Ill remind you: This is usually a precursor to a big move taking place

So, well have to continue to keep a close eye on these indicators to see where markets are headed next.

Have a safe trading day folks.

Well talk again tomorrow.

Regards,

Scott Stewart

Scott Stewart

Editor, Rude Awakening

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