Covid and the Perfect Storm.
Covid affected most of us. I’m not talking about the disease itself, but the response by governments all over the world. Who can forget not being able to travel outside your country, your state or more than 5km from your home? Being confined to your house? Being coerced into having the vaccine? Having to show vaccination certificates to get into shops, restaurants, cafes?
What has covid to do with trading?
Lots. People shut up in their homes, bored and with only online contact were looking for ways to amuse themselves, to channel their creativity and energy.
The number of digital and online business startups soared, and, of course, people were attracted to trading. A way to make easy money (!)
The perfect storm
Free time. More money, less opportunity to spend it. Commission-free trading. Easy to use, gaming-looking mobile apps. Social media. FOMO. Market volatility. Low interest rates.
What could possibly go wrong?
Everybody jumped in. Robinhood gained 3 million new users in Q1 2020. By May 2020 it had over 13 million users. Trading volumes increased hugely. Deposits increased from $4.3 billion in 2019 to $31 billion in 2020.
Were all these new users experienced? Did they have any idea what they were doing? Aware of the dangers involved?
Although we have no figures about losses by Robinhood clients, a recent study of derivative traders showed that 91% of traders lost money.
But we do have figures about their frequency of trading.
Trading Frequency
Robinhood users exhibit significantly higher trading frequency compared to traditional brokerage clients.
In Q1 2020, they traded nine times more shares than E-Trade customers and 40 times more than Charles Schwab customers.
Which gives a lot more opportunity to lose money.
Do you think that the trading houses were upset about this? Absolutely not. The more a customer trades, the more money they make.
Newbie Options Traders
Many of these newbie traders were dabbling in options, without realizing that they were increasing their risk and speeding up their downfall. In the fourth quarter of 2020, options trading accounted for approximately 63% of Robinhood’s payment for order flow (PFOF) revenue.
Long term effects of covid
Retail investors gained influence during COVID (meme stock surges like Gamestop). Since then, activity has cooled, but is now higher, and more organized. Platforms like Reddit and Twitter continue to influence market moves. As we have often noted, the idea that interest rates would remain near-zero indefinitely is gone. The market now reacts more sharply to central bank shifts.
0DTE (what's that?)
Do you know what that means? Zero Days to Expiration: referring to options contracts that expire on the same day they are traded.
On SPY, QQQ and others, options expire at 4PM every day, so there’s a lot of opportunities to lose money fast.
Yes, they offer the chance of quick gains, but also the chance of quick losses.
This is still increasing. In the first quarter of 2025, the average daily volume of 0DTE options tied to the S&P 500 reached approximately 2 million contracts, a substantial rise from about 388,000 in early 2022.
In May 2025, 0DTE options accounted for over 61% of all S&P 500 options trading volume, up from 47% in April.
The Narrative
The most interesting effect, I think, has been the rise of the narrative. What I mean by a narrative market is is one where investor behavior is driven more by compelling stories than by analysis.
During and after COVID, social media amplified these narratives – such as “tech is the future” or “short sellers are the enemy” – which moved prices regardless of earnings or valuations. Meme stocks like GameStop and AMC surged purely on viral momentum, not business performance.
This shift has made sentiment and storytelling powerful market forces,
Narrative Books
You can notice this in the stock market books that have been published since covid. They are mainly stories of how the author started with nothing and ended up a multi-millionaire due to a fool-proof system they have developed – but absolutely nothing in the way of proof, just a nice story.
Fairy Tales & Stories
Who doesn’t like a good story?
I’ve fallen for many in my time. You should see my library of trading books and online publications!
Honestly, you probably would not believe the number of websites and nesletters I’ve joined, and gurus I’ve paid many thousands for their ‘market wisdom’. All with a fairytale about rags to riches and how easy it all was.
None of them were profitable (other than occasionally) but they were my ‘tuition fees’ on what doesn’t work,
The Paradox
Yes, I totally get the irony of someone who has told a story throwing shade on others who tell a story – but I consider I am different (well, I would, wouldn’t I?) because I publish results and how I got them so that anyone can verify the results. I haven’t seen another author who shows ALL results, not just the ones that fit the narrative.
To the markets . . .
A bit of a nothing week – not great, but definitely not bad. Lets check the charts.
SPY Charts
Spy has been consolidating this week – but that’s OK, it has been doing it above the support / resistance (green dashes) line. The volumes are still average or above, which is a good sign as it means the market is not running out of puff.
The 10 and 200 SMAs are now over $35 apart- over 6%, so barring anything disastrous (meteor hitting earth, gravity not working, that sort of thing) it is unlikely that we will need to do anything this week. Except cross our fingers, and hope for the bull to continue.
On the weekly chart we can see that the bounce is well and truly established, and SPY is approaching the uptrend started in 2023. Its also worth noticing how deep and sudden was the bear market – comparable to the covid bear of 2020.
SPYG Charts
SPYG has well and truly smashed through resistance, and has been trading above it for 3 weeks. Good news. There is no point looking at the volumes (as we do for SPY) as SPYG is quite a different beast and does not represent the market as a whole, but a smaller part of it and traded by a lot less people.
But the chart looks good – consolidating around $95, no wild swings.
On the longer term chart we see that SPYG seems to be reverting to the uptrend starting 2023 (red dashed line)
QQQ Charts
QQQ is comfortably above resistance (previous high, pink dashed line) and is in a consolidation phase. Which is to be expected. All looks good.
On the long term chart QQQ is now above its uptrend which started in January 2023. It would be normal behavior is it dropped back to the uptrend – but we would prefer that it didn’t!
VIX Charts
The VIX is still in low-volatility territory.
ITMeter
The week ahead
It’s a busy week. Earnings season kicks off again. It’s funny – you feel like you’ve just come to the end of one earning season, and you’re starting another. But a few big ones, including Netflix.
There’s economic and inflation data:
- Tuesday, July 15: Consumer Price Index (CPI) for June, with expectations of a 0.3% monthly increase and a 3.1% annual rise. Core CPI is anticipated to climb 3.3% year-over-year.
- Wednesday, July 16: Producer Price Index (PPI), Industrial Production, Capacity Utilization
- Thursday, July 17: Retail Sales, Business Inventories, Housing Market Index
- Friday, July 18: Building Permits, Housing Starts, University of Michigan Consumer Sentiment Index
As well, the tariff sage continues, and so do ‘geopolitical uncertainties’. But let’s hope the markets keep all that in perspective.
The futures
Down a bit, but around half the level they were 2 hours ago.
This blog coming to you from . .
Below the Arctic circle now, in mainland Norway, but I’m still processing how different it was up there so here’s a few ‘wow’ moments from me.
How close you were to polar bears . . .(pink is the safe bit – see ‘you are here’)
And in the local shop – choice of rifles and ‘polar bear deterrents’.
And beautiful sled dogs, who live outside all year round and usually sleep in the snow . . .
but who also come with their own problems . . .
Fingers crossed for a good week!
Heather
Trade the tide, not the waves
15 Responses
I enjoyed 2 of your books and look forward to getting your emails. Thank you for all you provide to your readers. I’ve also enjoyed your travel posts as I’m headed to France for 3 weeks in Sept.
Camille
Hi Camille – lovely to here from you, and thank you for your kind words.
Re France – I have just arrived in Switzerland – Verbier – the French-speaking part, so feels like France, just with bigger mountains!
I hope you have a fabulous time.
h
I just looker and found your books on Amazon!
Love reading your blog, keep up the good work,
Jim
Hi Jim – i just looked too, and they are back and I can get back into my account – no notification from Amazon, just tried it.
It really set me back on my heels – being at the mercy of form notifications from norepoly@amazonKDP decision made by ??? makes you realise how little control you have over the situation!
Thanks for your kind words!
h
Good day. I wonder why your hard copy books are NOT available on amazon.com as of 15 July 2025 ? Tried searching by your name, no use either.
Hi Gareth – I didn’t know anything about this until you alerted me.
Amazon has decided to terminate my account (although they still owe me money) and has removed all my books. Here’s the notification:
Hello,
We were unable to verify your identity. As a result, your account has been terminated.
As part of the termination process:
• We will close your account.
• You’re no longer eligible to receive outstanding royalties.
• You’ll no longer have access to your account, meaning you will be unable to edit your titles, view your reports, or access any other information within your account.
• All your published titles will be removed from sale on Amazon.
Additionally, as per our Terms and Conditions, you aren’t allowed to open any new KDP accounts.
I have absolutely no idea what this is about, and because they have closed my account I can’t get any information. Have emailed them, but not hopeful.
Looks like this is the end of my career as an author!!
Heather,
Whoops! I checked your May 2025 blog there it was, “back in the market.” I must try to remain awake in the future. Thanks,
John 7/15/25
Hey John – no worries – sometimes I have to google myself!
h
Hello Heather,
Are you back in the market with DITM SPY trade? I noted your remark about we are in a golden cross moment. I must have been asleep at the switch. I have been waiting for a message in your blog to that effect. Thanks,
John 7/15/25
Hey John – I started the comments fromthe top – so asnwered the second one.
h
Hi Heather – continuing safe travels to you. I appreciate your mentioning (multiple times) how you’ve tried many strategies and unfortunately fallen for many of the “can’t miss” ones. Don’t feel bad, if we’re honest, we ALL have. I’m still using only the SPYG DITM strategy but think it is a great strategy – for the long haul of course. Since I retired about a year ago, I’ve been able to have some moderate success with various PUT and CALL strategies, HOWEVER, it requires a tremendous amount of time as doing so without interpreting the charts, checking indicators and the Greeks (which helps) improves the risk/reward but again eats up more time than I like. Cannot even wonder about trying day trading, I’m sure that requires yet a lot more time, even with lower chances of long-term success, IMO. Also, I don’t have data but will bet that with the significant increase in 0DTE options trading which you shared, the results from that across the board have a converse successful percentage change. Probably a pretty safe bet. Thanks for your gracious information sharing, God bless.
Thank you Brad!
Yes, I’m sure I am not alone in falleing for these ‘gurus’ – just that I may have taken longer than usual to work it out for myself!
Re day trading – you are right – it is time consuming. I was following the guy who wrote ‘best loser wins’ a year or so ago – just googled, its Tom Hougaard. He publishes hiw results and they are impressive, so I joined his live day trading sessions – only 1-2 hours per day, on the European market so better for me time-wise.
But . . . I put in several weeks of following him implicitly, live, only using very small trades on a very small account – but it still reduced from $5k to $4,300 during that time. I let it lapse . . assume the account is still there.
(I have accounts here there and everywhere, often I forget about them!)
but yes, the time commitment is huge, and that doesn’t fit my lifestyle!
x
h
Hi Heather,
Just finished your book and I probably missed it. Since the golden cross was achieved on SPYG in May and I am just starting out does timing matter or should I just be getting in on the December option when I can? Thank you.
Hi Phil, if a golden cross is in force (which it is) then it means the market is in a bull phase and OK to joing the bull run.
So, yes, OK to get into the market.
Of course, we don’t know when the bull run may end – it may be a week, a month, a year or more – so if you wait foe the current bull to end, then a bear before you get a ‘new’ golden cross you may be waiting a long time.
Here are some previous blogs about the topic: https://heathercullen.com/is-it-too-late/ and https://heathercullen.com/riding-the-bull/
They should give you an idea about similar situations.
Hope this helps
h
Thank you very much