A fair case can be made that since March 2009, investors could have bought every dip in the market and made money. In the 2008 recession the S&P 500 index bottomed on March 6, 2018 at 666.78. Since that time, the S&P 500 has soared by more than 340.0 percent, peaking on September 21, 2018 at 2940.91. In fact the term ‘buy-the-dip’ became very popular and kind of a household term with traders and investors over the past few years due to this huge advance.
Now, starting in October we have seen a very sharp and nasty stock-market correction taking place. Many investors and traders are calling this the start of the next great bear market. The new market saying that I have been hearing is sell-the-rips instead of buy-the-dips. It’s amazing how quickly things can change in the stock market. Over the past nine years, the trend has been your friend as almost every decline lead to a buying opportunity. In this environment, traders will need to find institutional support levels and then play the short-term bounces. Until this recent market top, it has been very difficult to sell the market short. Now in this environment, short selling is picking up and is a very good strategy if the correct pattern and resistance level can be found.
Technical trading will now be talked about much more at this time than when stocks went up nearly everyday. Now you will start to see the talking heads in the financial media referring to Fibonacci retraces instead of P/E ratios. A simple moving average will now become more important than the book value of a company. The bottom line is that technical chart readings will be critical to know and understand, especially as the media scrambles to find a reason for the move in a particular stock or equity.
Forget All That Cyber Monday Waste Of Money.
SPDR S&P 500