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The got here again from the three-day weekend well-rested and promptly popped 2.5% on Tuesday.
Headlines haven’t improved in a significant method, however extra importantly, they haven’t gotten worse both. Final week’s tumble to contemporary lows appears to have reached a near-term capitulation because it ran out of fearful sellers, giving us this good little bounce.
I’m beneath no delusion and suppose decrease costs are nonetheless forward over the medium and longer-term. However on the identical time, I acknowledge markets transfer in waves and I additionally know bear markets have a few of the greatest bounces on their method decrease.
As unhealthy as issues felt final week, the promoting bought a bit forward of itself and a near-term bounce appears applicable. How lengthy this lasts and the way far it goes is anybody’s guess, however 4k resistance could be very a lot on the desk if we string collectively just a few extra good up days. (A bounce again to 4k from Friday’s shut represents a 9% acquire within the index. Catch a part of that wave in a 3x ETF and now we’re speaking about actual cash!)
Purchase the bounces and promote the breakdowns. Appears straightforward sufficient however we should have the braveness to truly do it.
Now that the market is bouncing, it’s time to shut our shorts and begin shopping for the bounce. Begin small, get in early, maintain a close-by cease, and solely add to a commerce that’s working. Comply with these easy guidelines and there may be cash to be made. Or a minimum of, it opens the door to a really engaging, low-risk commerce.
Possibly we have to bounce just a few instances earlier than making our method again as much as 4k, however except somebody is psychic, we gained’t know which bounce is the true bounce till after it occurs. And since I’m not psychic, the perfect I can do is deal with the entire bounces as if they’re the true deal till they show me flawed. However so long as I begin small, get in early, and maintain close by stops, any errors shall be pretty inconsequential, particularly when in comparison with the earnings that come from driving the following wave greater.
Buying and selling is a sport of danger versus reward and proper now the danger/reward is stacked in our favor. Purchase the bounce, transfer our stops as much as our entry factors as this rebound progresses, and if we get stopped out, no large deal, we step apart and await the following bounce.
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