I got this email today and I thought it was terrific. At the bottom was permission to share so here it is…..if someone wants to explain how to upload a video, I’ll try to make the video clickable
Richard Moglen is a great follow not only on Twitter, but on YouTube, where he does great interviews with top traders, among other useful stuff.
A Warning About Bear Markets from William O'Neil
Richard Moglen
May 8
We are currently 5 months into a 25% Deep Correction / Bear Market on the Nasdaq Composite. We are trending below all daily key moving averages on this Major Index.
Additionally outside of cyclicals and energy names, there is little in terms of developing leadership.
This type of environment, unless you are used to trading intraday or 1-3 day swings can be incredibly frustrating to traders as it feels like the breakouts and setups that had been working so well when the market was in an uptrend have suddenly lost their edge.
However, it’s not that breakouts don’t work, it’s the overall market environment. At this stage, stocks have been and continue to see distribution from funds & institutions. Gap ups on earnings and other breakouts are opportunities for funds to sell into that liquidity.
Given this, traders should recognize the shift and adapt accordingly
O’Neil puts it simply “You absolutely do not buy breakouts during a bear market. Most of them will fail.”
From How To Make Money In Stocks page 151:
This warning is a clear reminder that the setups that work in uptrends do not have nearly the same effectiveness when the general market is trending below moving averages.
How long this correction/bear market last’s no one knows. We could put in a bottom next week or see chop for months more.
The key things to be on the lookout for:
Reading trading books is a great way to improve your process during this time. Here are my Top 20 recommendations:
Trading Engineered
The Best Trading Books for New Traders
With the market in correction, I thought a great article topic would be 20 Key books for traders to read that would help build a foundation for proper trading. If you read one of these every two weeks this year, you will significantly build up your trading background, and learn many concepts that you can put into practice…
Read more
3 months ago · 7 likes · 1 comment · Richard Moglen
By taking step back now as the markets are not favorable you are preserving your financial capital as well as your confidence. The longer this bear market lasts the stronger the uptrend and the greater the opportunity will be on the other side.
I particularly like Jim Roppel’s Rubber Band Analogy for market corrections:
Richard Moglen ️ @RichardMoglen
The Rubber Band Analogy - Market Corrections - @Upticken Full interview: youtu.be/r-GaO0AQMC4
February 24th 2022
39 Retweets205 Likes
Stay optimistic! Be Ready! A new uptrend complete with the next batch of True Market Leaders could be just around the corner.
I hope this article was helpful. If you did please go ahead and share it with others!
Richard Moglen is a great follow not only on Twitter, but on YouTube, where he does great interviews with top traders, among other useful stuff.
A Warning About Bear Markets from William O'Neil
Richard Moglen
May 8
We are currently 5 months into a 25% Deep Correction / Bear Market on the Nasdaq Composite. We are trending below all daily key moving averages on this Major Index.
Additionally outside of cyclicals and energy names, there is little in terms of developing leadership.
This type of environment, unless you are used to trading intraday or 1-3 day swings can be incredibly frustrating to traders as it feels like the breakouts and setups that had been working so well when the market was in an uptrend have suddenly lost their edge.
However, it’s not that breakouts don’t work, it’s the overall market environment. At this stage, stocks have been and continue to see distribution from funds & institutions. Gap ups on earnings and other breakouts are opportunities for funds to sell into that liquidity.
Given this, traders should recognize the shift and adapt accordingly
O’Neil puts it simply “You absolutely do not buy breakouts during a bear market. Most of them will fail.”
From How To Make Money In Stocks page 151:
This warning is a clear reminder that the setups that work in uptrends do not have nearly the same effectiveness when the general market is trending below moving averages.
How long this correction/bear market last’s no one knows. We could put in a bottom next week or see chop for months more.
The key things to be on the lookout for:
- Leadership groups to develop & diverge from the market decline and show RS
- Follow Through Day’s on the Indexes
- Feedback on pilot trades to consistently be positive.
Reading trading books is a great way to improve your process during this time. Here are my Top 20 recommendations:
The Best Trading Books for New Traders
With the market in correction, I thought a great article topic would be 20 Key books for traders to read that would help build a foundation for proper trading. If you read one of these every two weeks this year, you will significantly build up your trading background, and learn many concepts that you can put into practice…
Read more
3 months ago · 7 likes · 1 comment · Richard Moglen
By taking step back now as the markets are not favorable you are preserving your financial capital as well as your confidence. The longer this bear market lasts the stronger the uptrend and the greater the opportunity will be on the other side.
I particularly like Jim Roppel’s Rubber Band Analogy for market corrections:
Richard Moglen ️ @RichardMoglenThe Rubber Band Analogy - Market Corrections - @Upticken Full interview: youtu.be/r-GaO0AQMC4
February 24th 2022
39 Retweets205 Likes
Stay optimistic! Be Ready! A new uptrend complete with the next batch of True Market Leaders could be just around the corner.
I hope this article was helpful. If you did please go ahead and share it with others!
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