Breaking News
Get Actionable Insights with InvestingPro+: Start 7 Day FREE Trial Register here
Investing Pro 0
Ad-Free Version. Upgrade your Investing.com experience. Save up to 40% More details

Why Bears Keep Getting It Wrong

By Jani ZiedinsStock MarketsDec 03, 2021 03:03AM ET
www.investing.com/analysis/why-bears-keep-getting-it-wrong-200610309
Why Bears Keep Getting It Wrong
By Jani Ziedins   |  Dec 03, 2021 03:03AM ET
Saved. See Saved Items.
This article has already been saved in your Saved Items
 

Surprise, surprise, the S&P 500 recovered from Wednesday’s massive intraday reversal. Okay, no one was really surprised because Thursday’s 1.4% bounce was the market’s third rebound attempt this week.

S&P 500 Index, Daily Chart
S&P 500 Index, Daily Chart

“If at first, you don’t succeed; try, try again.”

You definitely have to give bulls credit for not giving up. The level of selling since Thanksgiving has been staggering, yet here we stand, only 3% from record highs. Talk about a can-do attitude!

As I often write, trends are far more likely to continue than reverse. That’s because a bull market bounces countless times but dies only once.

Maybe this bull market is dying, but smart money is sticking with the higher probability trade. Bears have been wrong all year, so what are the odds they’re right this time? Yeah, not very good.

The smartest way to trade this volatility is continuing to give the benefit of the doubt to the bull market while protecting our backside with a sensible stop-loss; ie, buy the bounce but keep a stop under recent lows.

Monday’s bounce didn’t work and neither did Thursday’s early rebound, but you know what, more often than not, the third time’s the charm.

It is hard to buy a third bounce after the first two unceremoniously dumped us out. But the harder it is to buy a bounce, the more likely it is to succeed. (contrarian trading)

I bought the bounce early because if I’m wrong, no big deal, I sell at my stops and wait to buy the fourth bounce.

Remember, getting in early is critical because:

  1. it greatly reduces our risk by giving us a healthy profit cushion, and
  2. by the time the bounce is obvious, most of the discounts will be long gone.

Meanwhile, Facebook's (NASDAQ:FB) recent price action looks downright dreadful. But is this finally getting so bad it’s good?

The stock is setting up for a nice bounce off of $310 support. Above this level, the stock is buyable. Under this key level and we get out. It really doesn’t get any simpler than that.

Okay, maybe it gets a little more complicated if the stock dips under $310 for a bit before bouncing back above this key level. In that case, we get out under $310 and buy back in above $310.

(Violating support before bouncing is an even more bullish trading signal than simply bouncing off of support because it shows selling capitulation and that bears have lost control of this trade.)

Why Bears Keep Getting It Wrong
 

Related Articles

Why Bears Keep Getting It Wrong

Add a Comment

Comment Guidelines

We encourage you to use comments to engage with other users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind:  

  •            Enrich the conversation, don’t trash it.

  •           Stay focused and on track. Only post material that’s relevant to the topic being discussed. 

  •           Be respectful. Even negative opinions can be framed positively and diplomatically. Avoid profanity, slander or personal attacks directed at an author or another user. Racism, sexism and other forms of discrimination will not be tolerated.

  • Use standard writing style. Include punctuation and upper and lower cases. Comments that are written in all caps and contain excessive use of symbols will be removed.
  • NOTE: Spam and/or promotional messages and comments containing links will be removed. Phone numbers, email addresses, links to personal or business websites, Skype/Telegram/WhatsApp etc. addresses (including links to groups) will also be removed; self-promotional material or business-related solicitations or PR (ie, contact me for signals/advice etc.), and/or any other comment that contains personal contact specifcs or advertising will be removed as well. In addition, any of the above-mentioned violations may result in suspension of your account.
  • Doxxing. We do not allow any sharing of private or personal contact or other information about any individual or organization. This will result in immediate suspension of the commentor and his or her account.
  • Don’t monopolize the conversation. We appreciate passion and conviction, but we also strongly believe in giving everyone a chance to air their point of view. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
  • Only English comments will be allowed.

Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at Investing.com’s discretion.

Write your thoughts here
 
Are you sure you want to delete this chart?
 
Post
Post also to:
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Thanks for your comment. Please note that all comments are pending until approved by our moderators. It may therefore take some time before it appears on our website.
Comments (1)
Chris Johnson
Chris Johnson Dec 03, 2021 4:54AM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
How many times can you jump on a piece of plyboard before it breaks?
Al Rouse
Al Rouse Dec 03, 2021 4:54AM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
4 times
 
Are you sure you want to delete this chart?
 
Post
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Add Chart to Comment
Confirm Block

Are you sure you want to block %USER_NAME%?

By doing so, you and %USER_NAME% will not be able to see any of each other's Investing.com's posts.

%USER_NAME% was successfully added to your Block List

Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.

Report this comment

I feel that this comment is:

Comment flagged

Thank You!

Your report has been sent to our moderators for review
Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.
Continue with Google
or
Sign up with Email