Play Editor's Note: This remains one of the most volatile markets in U.S. history. The Dow Jones Industrial Average delivered not one but three different 300-point moves on Friday. The last half of the day saw two 400-point moves. The lack of follow through on Thursday's bounce is bearish and as a trading newsletter we need to adapt to market conditions quickly. We're dropping our new bullish plays from Thursday night and adding new bearish plays.
Chipotle Mexican Grill - CMG - close: 44.32 change: -0.52 stop: 41.99
Shares of CMG actually held up reasonably well on Friday. The S&P 500 lost 4% while CMG only fell 1.1%. This sort of relative strength might tempt traders to keep bullish positions alive. We're not convinced. The market's action on Friday was bearish and CMG will probably be pulled lower as the major indices sink.
We're suggesting an early exit from our new CMG trade. If the market continues lower then best case for CMG is another test of support near $40.00 and then a bounce. Worst case is a crash through support. In either case we can revisit CMG near the $40.00 mark.
Steel Dynamics - STLD - close: 8.12 change: -0.76 stop: 7.95
The lack of follow through on STLD's bounce from Thursday was very evident early on. Friday saw the stock gap open lower at $8.53 (new entry point) and by lunchtime STLD had hit our stop loss at $7.95.
The market's afternoon bounce was strong enough to lift STLD toward $9.00 again but the rally failed. If STLD breaks down under support around $7.30 it could be headed a lot lower.