Mon 24 Dec 2018
There was no Christmas cheer for the US and global markets. US stocks plunged again on last Friday, sending the Dow Jones Industrial Average to its worst week since the financial crisis in 2008, down nearly 7 percent.
The Nasdaq Composite Index closed in a bear market and the S&P 500 was on the brink of one itself, down nearly 18 percent from its record earlier this year.
The Federal Reserve’s rate hike on Wednesday drove the losses in the US market for the week and fears of an extended government shutdown only added to the pain.
The Dow Jones Industrial Average fell 414.23 points to finish at 22,445.37 in turbulent trading that sent the blue-chip index up as much as 300 points earlier in the day, only to trade back in negative territory less than one hour later.
The initial rally upward on Friday came as Federal Reserve Bank of New York President John Williams told CNBC that the central bank could reassess its interest rate policy and balance sheet reduction in the new year if the economy slows.
But those gains slowly disappeared as investors used that short-term pop as a chance to sell more.
Stocks accelerated to their lows after President Donald Trump’s trade adviser, Peter Navarro, told Nikkei that it would be “difficult” for the U.S. and China to arrive at a permanent economic agreement after a 90-day ceasefire in the trade tensions.
The weak performance for the year is replicated in most global markets except a handful of markets which are still up for the year.
In fact, several barometers of a bear market, which is a fall of at least 20% from an all-time high or a fall of at least 52% from a 52-week high places a number of major global markets in bear territory already.
Knowing which markets are strong and weak will be very important as traders should trade the strong markets only in a bear market rebound.
Bear market rebounds tend to be sharp and brief and gives one of the best profit gains if entered at the right level and time.
Traders should be prepared to enter fast by knowing the high probability support levels in advance such as by the use of our Hunting Sheet.
Other methods include using counter trend indicators and critical levels breakout, which are calculated and identified in advance by our specialised algorithm and big data analytics of the entire breadth and depth of the market.
Another method is using volatility study as just like a rubber band that has been stretched, its only a matter of time before markets and stocks rebound after dropping too much in one direction.
Will the global markets and KLCI rebound soon given their steep falls or is the rout set to deepen in early 2019?
Volatility and fear are on the rise and these are giving elite traders one of the best opportunities to make gains in the market but at the expense of buy-and-hold investors.
That said, for buy-and-hold traders and investors, there are several bear market strategies that could be used to advantage in a bear market and these should be incorporated in the model portfolio strategies of retail buy-and-hold investors and institutional funds who are mainly into pure equity.
What are these strategies that are effective yet efficient to protect one’s portfolio yet make gains for long traders and investors in a bear market?
Join and network with us at our mPower Algorithm and mPower Trading programs and see how you should navigate, trade and profit handsomely in a bear market where others fear to move out of ignorance and conflicting media news.