SPY, QQQ, And IWM: The 3 Tickers To Short If The Market Declines After The Fitch Downgrade. How Traders Can Profit From The Fitch Downgrade Of US Bonds.

In 2011, when Standard & Poor's downgraded the United States' credit rating from AAA to AA+, the stock market reacted negatively. The Dow Jones Industrial Average fell by over 200 points on the day of the downgrade, and the S&P 500 fell by over 10% in the following month.

This was a significant event, as it reflected a loss of confidence in the United States' ability to manage its finances. However, it also created opportunities for traders who were prepared.

Here are some strategies that traders could use to profit from the news: Trading SPY (NYSE:SPY), QQQ (NASDAQ:QQQ), and IWM (NYSE:IWM) are an easy way to trade the market lower.  

• Sell short: Traders who believed that the downgrade would lead to a decline in stock prices could sell short. This involves borrowing shares of a stock and then selling them immediately, with the intention of buying them back later at a lower price.
• Buy puts: Traders could also buy puts, which are options that give the holder the right to sell a stock at a certain price on or before a certain date. If the stock price falls below the strike price of the put, the trader can exercise the option and sell the stock at the strike price, locking in a profit.
• Trade volatility: The downgrade is likely to increase volatility in the stock market. Traders who can trade volatility can profit from the increased volatility.

These Popular Stock Tickers did poorly in 2011 after the downgrade in bonds and may have a repeat performance today.

• Apple's (NASDAQ:AAPL) stock fell by over 10% on the day of the downgrade.
• Google's (NASDAQ:GOOG) stock fell by over 8% on the day of the downgrade.
• JPMorgan Chase's (NYSE:JPM) stock fell by over 7% on the day of the downgrade.
• Wells Fargo's (NYSE:WFC) stock fell by over 6% on the day of the downgrade.
• Microsoft's (NASDAQ:MSFT) stock fell by over 5% on the day of the downgrade.

These stocks were all considered to be relatively safe investments, so their declines were a sign that investors were becoming more cautious.

Tickers to Profit From Today. Here are some tickers that traders could profit from today from the same news:

• The iShares 20+ Year Treasury Bond ETF (NASDAQ:TLT) is a popular way to invest in long-term US Treasury bonds. If investors become more risk-averse, they may be more likely to buy TLT, which could lead to higher prices.
• The SPDR Gold Trust ETF (NYSE:GLD) is a popular way to invest in gold. Gold is often seen as a safe haven asset, so if investors become more worried about the US economy, they may be more likely to buy GLD, which could lead to higher prices.
• VIX: The VIX is a measure of implied volatility in the S&P 500. If the downgrade leads to increased volatility in the stock market, the VIX could rise, which could lead to profits for traders who are short volatility.

The downgrade to AA+ is a significant event, but it does not mean that the stock market is doomed. Traders who are prepared and who use the right strategies can still make money during this time. By following the strategies outlined above, traders can profit from the downgrade of US bonds.

It is important to note that these are just a few examples of stocks that could be affected by the downgrade. Traders should always do their own research before making any investment decisions. 

Sandra Stone teaches different trade strategies for different market environments. She has a professional discord service providing beginner and advanced traders with trade alerts for day, futures, and swing traders. Custom trade indicators to help newer traders enter and exit a trade with profit. Education and coaching in small group and one on one training sessions. Sandra can be reached at TradingMadeSimple.org, and posts trades on X formally known as twitter as Options_Sandy. She can be reached every trading day 714-202-7361.