The Stock Market is down over 20% from all time highs with many stocks declining 30, 40, 50, even more than 60% in recent months.
For many this can feel disheartening.
But you should be getting extremely excited & this is why 👇
(Quick Thread)
For many this can feel disheartening.
But you should be getting extremely excited & this is why 👇
(Quick Thread)
The Stock Market moves in phases, alternating between
Uptrends, Basing/Chop, and Downtrends.
This is a function of how the largest funds are positioning; whether they are accumulating, or distributing stock
Uptrends, Basing/Chop, and Downtrends.
This is a function of how the largest funds are positioning; whether they are accumulating, or distributing stock
Downtrends and Corrections are a natural part of the cycle.
Their depth, length, and severity may change depending on the drivers and circumstances but there is one important thing to remember:
The strongest moves comes after severe corrections/bear markets.
Their depth, length, and severity may change depending on the drivers and circumstances but there is one important thing to remember:
The strongest moves comes after severe corrections/bear markets.
If you study the best performing stocks in history, you will find that almost all of them make the majority of their significant returns coming out of large bases just as the general market was recovering from a correction.
Cisco, one of the best performing stocks ever, started its incredible move from the 90's Bear Market.
CSCO increased over 10X in 3 years.
CSCO increased over 10X in 3 years.
This pattern repeats over and over again in each cycle
Recently, the 2018 and 2020 significant corrections created the best opportunities for traders and investors.
$SHOP $ZM $PTON $DOCU $OKTA $AMD $NVDA $NIO $CRWD $SQ some names to study.
Recently, the 2018 and 2020 significant corrections created the best opportunities for traders and investors.
$SHOP $ZM $PTON $DOCU $OKTA $AMD $NVDA $NIO $CRWD $SQ some names to study.
As markets start to rally and confirm a new uptrend, watch for stocks that are leading the indexes, breaking out into new all time highs from sound bases.
Look for group moves and themes to emerge and market leadership to expand.
Then focus on the strongest stocks within those leading groups.
Then focus on the strongest stocks within those leading groups.
Keep in mind that many of these new leaders will be unfamiliar names.
The last cycles' leaders will often need to base extensively and will underperform.
Focus on stock in uptrends near all time highs.
The last cycles' leaders will often need to base extensively and will underperform.
Focus on stock in uptrends near all time highs.
Corrections can be painful, but with proper risk management and sell rules, you should be able to protect the majority of your capital as you get stopped out and the prior cycle's leaders start breaking down.
By protecting your capital as well as your confidence, you will be ready to take advantage of the amazing opportunities that will come after this correction
In this time do your homework, read books, run your scans and get ready.
In this time do your homework, read books, run your scans and get ready.
The longer this correction lasts the better the uptrend will be when it finally comes.
Jim Roppel's Rubber Band Analogy @Upticken
Jim Roppel's Rubber Band Analogy @Upticken
So stay optimistic, stay patient, and be ready!
I hope you found this thread helpful!
Be sure to:
1. Retweet the tweet below to pass it on
2. Follow @RichardMoglen
3. Subscribe to tradingengineered.substack.com
for more posts!
I hope you found this thread helpful!
Be sure to:
1. Retweet the tweet below to pass it on
2. Follow @RichardMoglen
3. Subscribe to tradingengineered.substack.com
for more posts!
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