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In the Q4 of 2018, the FED started a very aggressive policy shift in rates which led to the market careening off a cliff into the end of the year.
Maybe you remember it?
If you have a 401K, IRA or any other retirement accounts, you probably let a little blood from the downturn.
Here’s a little reminder of what it looked like:
It was about as pretty as Janet Yellen in a skimpy 2-piece (sorry to put that image in your head, but you know what I mean)…
I remember watching on Christmas Eve Morning… I could almost hear the screams of fund managers and retailers alike…
As markets plunged into the dark abyss with no bottom in sight.
Not exactly the greatest kickoff to the holiday season.
But, for savvy investors who don’t get offsides in their positioning…
Nasty news can provide a golden opportunity to raid the smoking wreckage.
Yeah, obviously it’s not a pretty metaphor but let’s be honest… the markets are nasty and someone is going to make money.
I figure it might as well be you and I.
Now, the problem is, when you’re in the middle of the madness it can be hard to keep your head straight.
Afterall, if you move in too soon… another falling object might land on YOU!
Which is why, the thing I look for in these situations is for markets to fail to make a new low in response to bad news.
For instance, the “slippery slope” of late 2018 caused AAPL to get into a head-on collision with the mack truck of market madness and bleed out over 30% of its value:
After a small bounce around Christmas, AAPL started a hard gap down for several days.
They lidded up and told investors they were going to stop reporting iPhone sales numbers…
… and shareholders didn’t take too kindly to the news.
But that rang in the low… because once the bad news gets out, it’s rapidly priced in and sellers run out.
We’re seeing a lot of that action right now.
The past half year has been tragic for the economy and individual stocks.
Many of these companies are reporting earnings that look like hot garbage.
And yet… they aren’t selling off hard.
Here’s an example in a healthcare company:
A few days ago, they announced a loss… it was a huge miss, and the loss grew relative to this time last year.
Maybe that’s why the stock is trading under 2 bucks… but notice how we aren’t seeing any hard followthrough to the downside.
If all the bad news is priced in, it becomes tough for the stock to sell off even further.
Which could be why a company inside recently picked up $400K worth of shares.
It could be the “silent signal” that the bottom is in… and we could see a quick pop in this stock for a solid profit.
Historically, a quick double off the lows is very realistic.
If you want to find out how I discover plays like this…
