Recent Tech Stocks Got You Worried? Stay Calm and Read This

From tech sell-off to trader’s mindset — stay ahead of the noise

Author

Market Mastery Digest
January 10, 2025

Candlesticks and Price Action

Hey there!

It’s been a wild start to the year with markets throwing some unexpected moves our way.

Nvidia’s sharp drop, coupled with tech stocks pulling back, caught many traders off guard.

And just when hopes for a Santa Claus rally were fading, the markets gave us another twist with volatility spiking.

But don’t worry — we’re here to navigate this with you together.

In today’s issue, we’ll cover some key market insights, how to read those tricky market gaps, strategies to manage volatility, and a mindset tip for staying disciplined amidst all the noise.

Oh, and of course, we’ve got a quiz for you to test your trading smarts!

Before we dive in, let’s wrap up last issue’s quiz and see how you did.

What is the term for the strategy of riding the market's prevailing trend until it shows signs of losing momentum?

Answer: D) Trend Following. (Explanation: Trend following is a strategy where traders ride the market’s prevailing trend until it shows signs of reversing. Unlike swing trading, which aims for shorter-term moves, trend following focuses on longer-term trends. The goal is to capture big moves by sticking with the trend until clear signs of reversal appear.)

And here is today’s quiz question:

What type of gap typically occurs when there is no significant news and is often filled quickly by price action?

  • A) Common Gap

  • B) Breakaway Gap

  • C) Continuation Gap

  • D) Exhaustion Gap

Keep reading to find out — the answer will be revealed in our next issue.

Tuesday saw Nvidia’s stock fall over 6%, despite a rally in the pre-market session, marking its worst day in months.

The drop coincided with a broader pullback in the tech-heavy Nasdaq, as several major tech stocks slipped after a period of strong gains.

Market gaps are those blank spaces on a price chart where the asset price jumps or falls sharply, skipping over certain price levels.

These gaps can offer valuable trading opportunities if you know how to interpret them.

Managing volatility is a critical skill for traders, especially during market turbulence like we’ve seen these few weeks.

Volatility indicators help traders assess the level of risk and adjust their strategies accordingly.

The commonly used volatility indicators are Bollinger Bands, ATR (Average True Range) and VIX (Volatility Index).

With so much noise in the markets — ranging from headlines to endless social media chatter — it’s easy to get caught up and make impulsive trades.

Staying disciplined amidst this noise is crucial.

The start of the year has already given us plenty to think about — big tech moves, market dips, and renewed volatility.

Staying informed and disciplined is key as we navigate what’s shaping up to be an eventful market.

Whether it’s learning to spot gaps, using volatility indicators, or keeping your head straight amidst the noise, every little edge counts.

We’ll be right here, keeping you updated every step of the way.

Stay tuned for more insights, strategies, and actionable tips in the next issue!