Dow is down again. As I mentioned yesterday, the trend was already down, but now it lacks any support at all.
Considering the rough market we’ve been seeing, I’ve got a couple of real hot tips to help you through it:
- How I find stocks to go long on — and short on!
- How I know when the market is starting to form a bottom!
- One of the best ways to protect a stock you own — especially in this market right now.
Click below to watch today’s video or read the summary down below to get all the details!
How I find which stocks to go long or short on:
- When I’m looking for stocks to go long on, I look for stocks making new 52 highs.
- And when I’m looking for stocks to short on, I look for new 52 week lows.
And today, based on the way I count new highs and lows (see below), there probably about 5 times more stocks showing new lows as we have stocks showing new highs today.
Here’s how I filter out all the garbage when I look for stocks making new highs and new lows:
- stocks over $25 only
- average daily volume must be over 500,000
- the stock must be optionable
- the stock must trade on a major exchange
Now, it’s important to know that there’s always going to be stocks making new highs, even in a bear market. (and vice versa)
But when you look at the bias right now — how many more are making a new low than a new high — you really see how much pressure there is to the downside.
How To Know When The Market Is Forming A Bottom
If we didn’t have this many stocks making new lows right now, you might be able to make a case for the market starting to form a bottom.
That’s what we’ll start to see before the market starts to rally, so keep an eye out for that.
And we will see a rally before the end of the year. Fourth quarter is usually good for that.
Maybe not in the Dow or the S&P so much, but tech — the Nasdaq is where I’m expecting it.
That’s because while all three major indexes might be bearish, the Nasdaq is in the best shape of the three.
Another thing to keep in mind is when the rally starts to take shape, look at stocks that have held up during the bearishness we’re seeing now.
Because if a stock can fight the broad market and trend in the other direction, you know you really have something special there.
Now I’ve dropped a bunch of tips for you today, but here’s the real big one…
One Of The Best Ways To Protect A Stock You Own
The married put is one of the best ways to protect a stock you own. Especially when you’re buying a stock in a rough market like we have right now.
And this is how it works:
Let’s say you buy a stock at 100. But you’re afraid it might go down to 97 or 95 before it goes to 120.
When you buy the stock, buy a put with a strike price equal to the price you bought the stock at. In this example that would be 100, and pick an expiration about 30 days out.
This gives you protection, because if the stock goes down, the value of the put is going to skyrocket. It’s the #1 insurance trick when you trade stocks.
And don’t forget to keep an eye on new highs and new lows as we kick off the last quarter of the year.
Trade well,
Jack Carter
P.S. Join me in taking 4th quarter by the horns. My latest project is Backdoor Income. I just launched it a few days ago and all 3 of the trades we’ve put on so far have come back winners. I urge you to check it out.
