≈You Risk Missing out on the Biggest Up Days≈

Traders,

Volatility tends to cluster. Big down days (like Monday) don’t lead to peace and calm. Instead, the violence of the plunge is usually echoed by the speed of the recovery. Tuesday saw stocks come roaring back, especially in the beaten-down Russell 2000. The small-cap-laden index surged as much as 3% intraday.

But do you know who didn’t participate in the vigorous snapback?

Those who puked up their holdings during Monday’s bloodbath. History tells us that a good chunk of market returns is packed into a few sessions. And if you…


Traders,

Monday saw the Dow Jones Industrial Average suffer its largest down day since before the Presidential Election. CNBC highlighted the 700 point drop because doing so sounds far scarier than saying the popular benchmark fell nearly 2%. They weren’t wrong, though. It was a far bigger down day than what recent market movement has trained traders to expect.

If you want some signs that relief is on its way, though, I have three. These are the types of things I look for that signal we saw capitulation. For the uninitiated, “capitulation” is what we call it when weak hands…


≈ Compared to America, Foreign equities offer discounts≈

Traders,

Many traders focus on U.S. equities to the exclusion of all else. America boasts the biggest companies, the most well-capitalized, and arguably the most regulated. Over the past 13 years, U.S. stocks have been trouncing the rest of the world in their performance.

But there is a negative to the rip-roaring gains.

‘Merica has become expensive. Quite so. The price-to-earnings ratio differential between U.S. stocks and the rest of the world has reached a multi-decade extreme. …


≈ Compared to America, Foreign equities offer discounts≈

Traders,

Many traders focus on U.S. equities to the exclusion of all else. America boasts the biggest companies, the most well-capitalized, and arguably the most regulated. Over the past 13 years, U.S. stocks have been trouncing the rest of the world in their performance.

But there is a negative to the rip-roaring gains.

‘Merica has become expensive. Quite so. The price-to-earnings ratio differential between U.S. stocks and the rest of the world has reached a multi-decade extreme. …


≈ It Doesn’t Always Bring Destruction ≈

Traders,

One of my favorite ways to measure the percentage of stocks in an uptrend is to use the 50-day moving average. Those above it are bullish, and those below it are bearish. The healthiest markets see widespread strength across all sectors. The more uptrending stocks in each sector, the better. With the recent fallout in cyclicals, we’ve seen a sharp deterioration in market breadth. Leadership is narrowing, and fewer and fewer stocks are powering to new highs.

Do you know what percentage of the S&P 500 members are above their 50-day moving…


≈ Can financials take us higher?≈

Traders,

Earnings season is upon us, and, as usual, banks are leading the charge. JPMorgan and Goldman Sachs are unveiling their numbers this morning. Many other heavy hitters will follow. So here’s the question circling investors’ minds: Will the financial sector get the party started with results worth celebrating?

At the risk of reading too much into Monday’s price action, those who were gobbling up financials certainly think so. XLF was the leading sector on the session, ending higher by 1%. The strength demanded we include XLF as the chart of the day.

If…


Coach Mark Here,

I wanted to take a second to discuss a special webinar my brother Matt is doing on patterns tonight at 7:00 P.M. EST on the Tackle Trading YouTube channel.

I am a true believe in technical analysis. Technical analysis is truly amazing and I use it (as most traders do) on a constant basis in my decision-making process. At the heart of technical analysis is pattern recognition. Tonight, Matt will discuss a variety of patterns including the bullish retracement, the high base and most importantly the psychology behind patterns. I find the psychology behind patterns particularly fascinating…


≈ This is a good thing

Crude oil is taking it on the chin this week, suffering its first break of the 20-day moving average since mid-May. The correction is causing no shortage of register ringing across the energy sector, which isn’t helping the Russell 2000.

There is a silver lining to the shellacking, though. Oil prices weren’t going to run to $100 without deeper retracements along the way. Dips like this shake out the weak hands and ultimately create a more sustainable trend. …


≈ Paper Trading Puts≈

Traders,

Say you want to buy a protective put. Maybe you’re purchasing it on a single position, or perhaps you’re acquiring it on an Index ETF like SPY to protect your portfolio. In either case, you must necessarily decide which strike price and expiration to use.

When it comes to strike selection, I like to use an insurance analogy-the higher your deductible, the cheaper your premium. In the case of puts, your deductible is the distance OTM. If you buy a put that’s 5% OTM, then you have a low deductible, but the premium will be…


≈ Protection and Puts≈

Traders,

We’ve looked at two situations where you don’t need portfolio protection. Now, let’s analyze one where you do.

Let’s say you own stock or ETF positions with the intent of holding them for multiple years. The only way it’s possible to keep something for that long is by not using a stop loss. Otherwise, you’ll get shaken out along the way.

Here’s a helpful exercise. Look at the ten-year history of whatever stock/ETF you’re going to buy. Count how many times it corrected more than 10% along the way. My bet is you had multiple…

Tackle Trading

Learn. Trade. Connect. Succeed. tackletrading.com

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