Get 40% Off
🤯 Perficient is up a mind-blowing 53%. Our ProPicks AI saw the buying opportunity in March.Read full update

Bear Squeeze Remains in the Offing as Stocks Bounce

Published 11/01/2023, 02:57 AM

The S&P 500 rallied another 0.6% Tuesday, extending this week’s rebound.S&P 500 Index-Daily Chart

Nothing meaningful changed in the headlines to justify this bounce, but after a certain amount of selling, we always run out of sellers. This time, it took eight days to exhaust the supply of near-term sellers.

As I wrote last week, and again on Monday, this is the bounce I was waiting for:

I have no idea if Monday’s bounce will stick, but it was a good start, and that’s all I needed to put on a partial position. Start small, get in early, keep a nearby stop, and only add to a trade that’s working.

If the index retreats on Tuesday, I will pull the plug for a small loss and try again next time. If the rebound keeps going, I will add more and lift my initial stops to near my entry points, greatly reducing my risk.

I still have no idea how long this rebound will stick around, but now that prices are comfortably above my entry points, I lifted my stops to my purchase prices, making this nearly a risk-free trade.

If the index retreats today, I get out near breakeven. If the rebound continues, I will let those profits keep rolling in. These low-risk/high-reward trades are what I dream of.

The odds are still good this bounce will fail because two bounces fail for everyone that works, but if this rallies just a little further, expect bears to start scrambling for covers as they get squeezed.

3rd party Ad. Not an offer or recommendation by Investing.com. See disclosure here or remove ads .

Maybe this week’s bounce is nothing more than a false bottom on our way lower, but as a nimble swing trader, I’m okay with that. I plan on collecting profits long before the next down wave hits.

Latest comments

> I plan on collecting profits long before the next down wave hits OK you have 2 hrs left until Powell gets the mic
Great analysis as always, thanks for sharing!
There is one risky point in this strategy , it’s possible to loose a ascending position if the price momentarily goes below your stoploss then come back again its ascending path . In that case according to your entry point still maybe you’ve already some profit but you loose the further one .
this strategy is based on hope but hope is not a strategy. The market rises because november typically the best month for stocks (rising 82% of the time). Also 1st day of month the market rises (78%). Statistics is a strategy
The only useful words in this ramble is “ i still have no idea “
Might as well go to a fortune teller if the advice is this quality.
Bull dump in the offing, too.
Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.