SPY on the Market: Circuit Breakers

You are receiving this email because you signed up to receive our free e-letter DayTradeSPY's SPY on the Market, or you purchased a product or service from its publisher, Eagle Financial Publications. [SPY-on-the-market-banner-1200] [Trading Room]( [Pick of the Day]( [Inner Circle]( [Ultimate Trading Workshop]( [SPY Signal]( SPY on the Market: Circuit Breakers by Hugh Grossman and Ahren Stephens 08/22/2024 SPONSORED CONTENT [These stocks could surge despite the current downturn]( The market may be down... But when Apple makes this announcement as soon as September 10... These three stocks could start to take off. [Here's why.]( I was working for corporate America back when stocks crashed on Black Monday in 1987. While I was not even remotely interested in stocks and therefore oblivious to the market, I knew something horrible had happened, just by the outrage on the street. That chatter around the water cooler was doom and gloom as to how the Dow Jones Industrial Average dropped by more than 20%, putting the market in a state of chaos. Clearly, there were signs of dysfunction. Such an event led regulators to implement a tool that would pause the market and let everybody take a deep breath. This facilitated the ability of traders to gather some information so they could make more informed decisions, rather than resorting to trading in a panic. Through several iterations and modifications to the design, the circuit breaker as we know it has only been triggered once since its initial adaptation. That was on October 27, 1997, when the S&P 500 fell 6.86%, the Nasdaq dropped 7% and the Dow moved down 13.3% off its high. Some analysts saw this crash as a "correction" to the overheated markets, which had doubled in value in 30 months. Then, the onset of the COVID-19 pandemic sent markets in a panic mode, triggering a circuit breaker four times in 10 days as prices collapsed the day the World Health Organization declared a global emergency. The term "circuit breaker" refers to the emergency-use regulatory measure that temporarily halts trading on an exchange. It is designed to curb panic selling or manic buying. They can be used for individual securities as well as broad market indexes, like the S&P 500. They are triggered automatically when prices hit predefined levels within a period of time. For the S&P 500, there are actually three points when it kicks in, should trading get overloaded. [I Can’t Believe A Ticker Like This Exists]( Years ago, I came across a stock market ticker… One that has been my “edge” ever since… I trade it over and over again, every week… And thanks to this one ticker, I hit on 93.6% of my trades in 2023. [Here’s how you can too.]( Exchange-traded funds are considered as individual securities under the circuit breaker system. There are special considerations as well. But by and large, this tool is to preserve the integrity of the markets. Under Securities and Exchange Commission (SEC) rules, a stock needs to be paused if it moves greater than 5%, 10% or 20% from the previous day's close. There are rules attached, depending on the type of security. If a circuit breaker is activated, it also affects the options market, nullifying any trades that occurred after the halt was triggered. Circuit breakers have a dark side in that they generally lower overall price levels and substantially alter price dynamics. As the market drops closer to the trigger threshold, volatility rises sharply while returns exhibit negative skewness with an increasing magnitude, effectively further destabilizing the price during large market declines. The closer the price drops to the trigger point, the stronger the likelihood a trigger rises exponentially. Like a magnet, it attracts more sellers not wanting to be stuck in their positions when trading is halted. As more sellers step in, prices drop further and faster in a self-fulfilling prophecy. [#1 A.I. Software to Find What to Trade]( With thousands of assets to choose from, filtering through these to find the most promising ones can be daunting. What if I told you there is a search engine like the one you love and trust, but designed for traders like you to search and dominate the markets by accessing the most timely and accurate information? If you’ve never traded with predictive analysis or leading indicators... If you feel like you don’t have the time (or knowledge) to properly conduct thorough research and analysis... [Come learn (for FREE) the #1 A.I. to find what to trade.]( It is for this reason that we -- and many other traders -- take a back seat with regard to trading, lest we be caught in this whirlwind of sellers. If/when you see our Pick of the Day predictions report a "No Trade Day", it may well be for this phenomenon. In other words, take heed as we are protecting you from a potentially disastrous situation. "It's better to not be in a trade wishing you were than to be in a trade wishing you weren't." Never fret missing an opportunity; the market delivers them many times every day. This is just one of the many things we discuss in our morning Trading Room. You can sit on the sidelines and learn this on your own, likely at great expense, or you can jumpstart your trading with us, mornings, 9:20 to 10:30 a.m., ET. Invest in your own education first before putting a dollar in the market. [Click here for details and to subscribe](. Not sure if options trading is for you? Join us at 8 p.m., ET, Sunday night for our weekly Intro to Trading / Week in Review. [Click here to register.]( Sincerely, [Hugh Grossman][Ahren Stephens] Hugh Grossman and Ahren Stephens Editors, [Trading Room]( [Pick of the Day]( [Inner Circle]( and [Signal]( About Hugh and Ahren: [Hugh Grossman]Hugh Grossman has manned the helm of DayTradeSPY for over a decade now. A self-taught trader, who turned master trader, has learned everything about trading the SPY (the SPDR S&P 500 ETF). Hugh has been guiding his subscribers of Inner Circle, Pick of the Day, DayTradeSPY Signal, and the Trading Room to daily profits since 2010. [Ahren Stephens]Ahren Stephens has been studying the markets since his teens. He opened his first trading account at the age of 18 and has studied the stock market, forex market, and commodities markets for more than 20 years. Ahren is a licensed commodity broker, and was most recently an analyst at an award-winning, multi-million-dollar firm. With his knowledge he has been guiding his subscribers of Inner Circle, Pick of the Day, and the Trading Room to daily profits. About Us: Eagle Financial Publications is located in Rosslyn, VA. – Blocks from the Capitol. Our products have been helping investors build their wealth for several decades. Whether you’re a long-term investor or short-term trader, you’ll find the right strategy for you, including how to earn more steady income to spend now, preserve and grow your capital to enjoy later, and whatever other investment goals you have. 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