It’s been a bumpy couple of weeks and that theme continued Wednesday morning as the S&P 500 retested mid-4k support. But the other important theme also continued, and that’s every scary dip finds a bottom and bounces within days, if not hours.
Taken together, this week’s tumble combined with Wednesday’s strong recovery gave both bulls and bears something to crow about.
While the market thus far appears inclined to bounce off of 4,050, odds are that level won’t withstand another test.
Do we fall under 4,050 support? At this point, chances are pretty good. But most likely that 3rd dip will turn out to be the charm and the resulting bounce will be the real one.
But can I say that with 100% conviction? No, of course not. And that means I include flexibility in my trading plan.
I’m buying these bounces, but I’m also ready to pull the plug if they don’t work out. Just because the first or second bounce doesn’t work doesn’t mean I will give up. As I said, often these things don’t work until the third time.
And if the third time doesn’t work, no big deal, I get out and try again.
Selling the dip early and buying the bounce early is the best way to stay ahead of this volatility. Unfortunately, most people get their ass handed to them because they get out late and get in late.
Trade proactively, not reactively and you will come to enjoy this volatility, not fear it.
The wild ride continues in Bitcoin. But if a person was savvy and had stops near $60k, or even $50k, today’s huge collapse to $30k would have been a fantastic buying opportunity, not a reason to panic.
Plan your trade and trade your plan. Life becomes so much more pleasant once you learn to trade this, p way.
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Jani Ziedins (pronounced Ya-nee) is a full-time investor and financial analyst that has successfully traded stocks and options for nearly three decades. He has an undergraduate engineering degree from the Colorado School of Mines and two graduate business degrees from the University of Colorado Denver. His prior professional experience includes engineering at Fortune 500 companies, small business consulting, and managing investment real estate. He is now fortunate enough to trade full-time from home, affording him the luxury of spending extra time with his wife and two children.