Tuesday morning saw a good open turn sour.
The S&P 500 pushed to within a whisper of record highs in early trade, but it was all downhill from there. Within an hour, the index retreated more than 30-points and was retesting 4,200 support.
But, just when things looked their most dire, supply dried up and the market traded sideways the rest of the day, ending two points above this key psychological level.
There weren't any new headlines driving this selling and instead, this was simply another flareup of second-guessing over inflation worries.
Indecision and fear of heights is a normal part of every move higher and this rally is no different. But the thing to remember is we’ve been living under these clouds for nearly two months.
If they were going to smother this bull market, it would have happened by now. Instead, this is little more than a purge of nervous owners and is replacing these weak sellers with confident buyers who are comfortable holding these risks.
If the first few bouts of indecision couldn’t kill this rally, the third and fourth attempts are even less likely to succeed.
That said, we could still see a dip back to 4k support before this is all said and done. But until something new and unexpected comes along, treat every dip as a buying opportunity.
The meme stocks are making a comeback. GameStop Corp (NYSE:GME) broke through $200 resistance last week and as I wrote then, this breakout is buyable for the most nimble and risk-tolerant traders.
This is trading well and still holdable, but be ready to lock in profits at a moment’s notice because these gains will disappear even quicker than they came.
AMC Entertainment Holdings (NYSE:AMC) secured some financing and it looks like it will survive COVID. No doubt investors are happy to see this company on solid financial footing.
That said, the stock is trading near record highs. To say this company is in the best shape of its life overlooks a lot of dark clouds hanging over it. Namely the relentless shift to video on demand with many studios now streaming movies simultaneously with their theatrical release.
AMC is a buy for the moment because something that is high tends to get even higher. But never forget, this is a trade, not an investment.
Let someone else get stuck holding the bag. Keep holding for higher prices, but be ready to pull the plug as soon as this turns south.