It was fun while it lasted. As the market recovery has been going on, it is certainly not a smooth ride. There are bumps and jumps — yesterday the market shot up. Today, the market is in the mood to sell. Till yesterday, we could be forgiven to think that this market recovery is going to continue on a straight path. But as could be observed, the market was hitting resistance levels and you know that buyers are not pushing the prices up anymore — time to take profits.
OK so what does this mean for all of us? Remember the bull run is over. We are now in a bear market — in the US it has not fallen as a whole but a lot of stocks had already dipped by 20% from highest high which is the definition of bear market. There is no one trend also — the market is volatile. So if you position yourself and follow a trend – you need to be ready to take the profits quickly. If you are thinking a reversal is going to happen “anytime” – be patient and take that reversal only when following a confirmed move. Yes, follow every rainbow…
Too hard? Don’t be discouraged. We are allowed to be a little confused, however if we just check the data, it gets easier. We teach this in our workshops — but the general principle is —
1. Check the market direction
2. Decide on the strategy that works in this market type
3. Find the stocks that follow the market direction and yields an acceptable return on the strategy you apply.
OK so in real life – we check the market – we are in a Bear – volatile market. That means the major direction is going down. For this market – our strategy could be to buy only the safest stocks that people don’t want to sell (for the dividends, growing market share etc) at the Support level as much as possible. Or if “shorting strategies” are available to you, to sell the weak stocks and profit on the downside. We discuss the details in our workshops – the next events are on March 5.
Check out the topics here http://highheeledtraders.com/2015/11/20/current-workshops/
and you can register with me at charmel@highheeledtraders.com.
http://www.bloomberg.com/news/articles/2016-02-22/sovereign-wealth-funds-seen-selling-404-billion-of-equities
