This guide is meant to be written for a common person without an extensive knowledge of stocks and its universe of technical/fundamental analysis. It can also be consumed by a person who wants to make money off stocks without significant time investment. (Stock trade list link at end of the story)
Stock market trading principles:
Two weeks ago, I posted a story predicting the market would take a breather before going higher. This time, the prediction was wrong as the market continued the march higher reaching nearly 4200 (for S&P 500). So now we have a real example of market being difficult to time as per the trading principles)!
What to do in this case? Well after it becomes obvious that your prediction has proven incorrect, you should follow the trend and accept you are wrong! I also reluctantly ended up buying and gaining from the rise. It was much lesser than I could have…
It has been 2 weeks since I posted my story “All time highs: out of hibernation” predicting S&P to rise beyond 4000. That prediction turned out to be very correct (even surpassing my expectations) as S&P went from 3974 to 4128 in virtually a straight line in that period!
Hope you enjoyed making the EZMoney and are doing cartwheels at the moment!
Q) So what’s next?
A) We are due for a pause where the market rests and goes sideways to down, consolidating these sharp gains. …
The last two weeks (since my last post) may have seemed a long time where S&P500 churned sideways and oscillated in the 3850–3900s range. Clearly, the pullback I had been expecting after a huge run lasted a bit longer.
Such hibernation and profit booking (as you saw me do as well) is perfectly healthy and part of a strong bull run. As I write this, S&P500 staged a strong two day turnaround rising almost 135 points from Thursday 3/26 low to Friday 3/27 high and closing at another all time high!
In my previous story shared last weekend, I took the bullish stance on the markets when pundits were suggesting to build a cash position. This indeed proved correct when S&P 500 touched an all time high last week and was up a ~3% for the week! You may have also seen increasing number of buys in my stock sheet as well.
Congratulations on making this EZMoney!
Q) So what’s next? Should I sell and take profits?
In the previous story published on Thursday March 4th, I mentioned that we seemed to be close to a short term bottom. So the top question on your mind after the Friday reversal is “Are we there yet? Can I start buying again?”
The answer is “Yes”. The technical action on Friday was constructive (we did not hit a new low) and it is time to start buying. You may have already seen my Friday stock picks and noticed that I have started adding on some winners.
Q) Could the market go back down into the sub-3800s range (for the…
As I am writing this (March 4th), we saw yet another brutal selloff for the third day in a row (with 4.6% S&P and 7.5% Nasdaq aggregate declines). This seems unnerving after a huge up day on Monday. So in the spirit of threes (this being the third month of the year), lets answer three of your top questions!
Q1) So what should you do amongst this selloff? A) Nothing!
Contains specific stock trades with dates and buy/sell prices (also linked from first story)