Author: Chris Hood
I’ve made it clear that I trade on technicals, not fundamentals.
However, as much as I distrust economists’ opinions, fundamental relationships in the market hold true.
One is the relationship between rising interest rates and technology…definitely something to consider when trading or investing in these companies.
Companies with a high debt-to-equity ratio tend to rely on borrowing to finance their operations.
When interest rates are low, these companies tend to do exceptionally well. Borrowed money aids in the research and development of new products and services which find eager buyers the moment they’re released.
That isn’t currently the case.
With inflation at levels we haven’t seen since the 1980s, we’re likely to see some historically high interest rates coming from the Fed in the coming year.
The US definitely appears to be sliding headlong into a recession.
With all the uncertainty, volatility has been high, and day trading has been profitable for me. However, I’m hesitant to put on any significant long-term positions because I just don’t know what will happen.
I’m reasonably sure this bear market isn’t ending soon.
But just how far it will drop and when it will take the next leg downward is anyone’s guess.
Options are time sensitive, so I can’t send you any long-term trade recommendations with a clear conscience. If you have a day trading system, I suggest you stick to that for now.
But a down market isn’t necessarily a problem.
Remember that the stock market isn’t going to zero. Forget that nonsense.
Currently, many stocks are priced at levels ideal for averaging down on the shares you hold, and they’re likely to get even cheaper in the coming weeks.
Who would have thought that a company like WMT would miss earnings and drop 9% after hours?
When massive consumer staples companies miss earnings, technology companies could have serious trouble.
But please don’t trade on that advice without your own analysis.
And remember that predicting a stock’s behavior after earnings is a complete gamble.
The primary key here is that those investing for the long haul might consider grabbing some shares of these powerful companies if their stock prices tank. Companies like MSFT, NVDA, META, and others.
They may be taking a beating now, but they’ll run free again in time.
After its split, even GOOGL is more affordable to the average trader. Yesterday’s closing price of 107.51 per share sounds much better than the 2100+ dollars just a few weeks ago.
It’s imperative to consider not just where the market is now but where it might be in a few years.
Wouldn’t you like to be able to be able to get in right near the bottoms and be sitting on a hugely profitable portfolio?
Historically bear markets last for about 16 months, and we haven’t had one in a while…take full advantage of it.
Down markets are a goldmine for investing.
I believe it was Winston Churchill who said, “Never let a good crisis go to waste.”
He was right. Heed his advice, and don’t let this one slip by.
It might not pay off immediately, but these are the exact moments when decisive action can change your life forever.