Tuesday, September 29, 2020

Don’t trade in Q4 2020 without this...

If you want an edge in the market, it's important to understand both bull and bear markets...

September 28, 2020

Bulls vs. Bears

✔️ 2020 has been one of the craziest years ever in the stock market … Here's how to prepare for the last quarter.

✔️ The gruesome story behind the terms 'bull' and 'bear' in the stock market...

✔️ Plus, how to trade through the pre-election panic!

It's time to have a talk about the bulls and the bears. No, this isn't a 'birds and the bees' conversation — it's all about the direction of the market.

  

The terms 'bull' and 'bear' refer to the overall direction and mood of the stock market. A bull market is uptrending; a bear market is downtrending.


These terms have been used to describe marketplace conditions for centuries. Since human nature hasn't changed that much over time, the terms still apply today. 


2020 has shown us the awesome power of both bull and bear markets. We've seen some incredible highs and some devastating lows.


If you want an edge in the market, it's important to understand both bull and bear markets. That way, you can adjust your strategy accordingly. 


Ready to learn about the difference between a bull and bear market? Let's go…

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A Brief History Lesson

 

In the 11th century, there was a gruesome practice known as bear-baiting. Packs of dogs would be pitted against a bull or bear to fight.


These fights were public spectacles. People would gather together to watch and gamble on the outcome.


Those who bet on the bears were called bears. Those who bet on the bulls were called bulls. Gamblers became associated with the animals they bet on.  


Civilization has come a long way since then, but the same general rules still govern the stock market. 


Traders are often referred to by the direction they think the market will go. 


Bulls attack offensively, with their horns up. 


Bears attack defensively, swatting down with their paws. 


The main takeaway? Bulls = up. Bears = down. 


The market follows this logic, too. When the market's rising, it's called a bull market. When the market's failing, you'll often hear me say that the 'bears are in charge.'


As a trader, how do these market conditions affect you?

Bull Market


The stock market has a historical tendency to trend upward over the long run. Bull markets typically last longer and make bigger overall moves than bear markets.


A market is considered bullish when the market is making new record highs without a pullback of 20% or more.


Our last bull market lasted from 2009 to 2020 — that's 11 years of gains! During that time, the S&P 500 climbed an incredible 500% from a low of 667 to a high of 3,394.


Bull markets typically occur when we have relative peace and steady growth. Oil prices tend to be stable and unemployment tends to be low.


The market is always forward-looking. When there is no turmoil on the horizon, people feel good about the market. As a result, it tends to rise. The longer the outlook remains positive, the longer the bull market can last.


Bull markets tend to rise slow and steady the gains are made slowly over a long period of time. 


A bear market is the opposite in pretty much every way possible.

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Bear Market


A market is considered a bear market when it declines 20% or more from its peak. We've experienced a bear market in 2020.


Bull markets go up like an escalator — slow and steady. Bear markets fall fast — like a broken elevator. 2020 is the perfect example. The good news is bear markets are typically short lived.


As fear about the coronavirus spread across the globe, we saw a lot of uncertainty. Oil prices plummeted into negative territory, international tension heated up, and unemployment skyrocketed.


The S&P 500 reacted accordingly. It dropped over 30% over the course of about four weeks. The market gave up four years of gains in just over 20 trading days.

Historical Data on Market Conditions


The most recent decade-plus bull market was a historic event. It was the longest bull market in history, with incredible gains that continued over a long period of time. 


What goes up must come down. When the bull market ended, we experienced one of the fastest-acting bear markets ever.


Now, moving into the final quarter, the market has regained those losses. In the first week of September, we even experienced new record highs.

What does that mean for traders like you and me?

Trading Bulls and Bears


Major indices like the S&P 500 show us the broad trend of the stock market. The list of stocks monitored on an index can change over time. Sluggish performers are removed, and fast-growing companies are added.


An index's performance is based on averages. When an index is up, it doesn't automatically mean that every stock will go up. Same when an index is down.


  • Some stocks go down in bull markets.

  • Some stocks go up in bear markets.

When trading individual stocks, there are no guarantees. Buying and holding any single stock isn't an ideal strategy.


For example, Enron was once the fastest-growing company in the world — so we thought. If you held shares in Enron, they'd be completely worthless now.


The company looked great on the surface but it was a complete fraud built on lies.


You've got to be cautious, regardless of the market conditions!

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Planning Your Attack


I've been doing this for a long time now. I've seen several bull and bear markets come and go.


When you're in the midst of one or the other it feels like it'll never end. But no market will last forever. Conditions are always changing.


As a trader, one of the best things you can do is always have a plan. 


In case you're wrong, have a stop in place where you'll take the loss and protect the rest of your capital.


In case you're right, have a plan to cash out your profits once your goals are met. Don't hold your positions forever!

Go with the Herd


Nobody can know where the top or bottom of a given market will be.


When markets are rising, don't try to pick the top. Instead, ride the momentum upward as long as possible. Make sure you always have an exit plan at all times.


Don't try to pick the bottom in a failing market, either. Bear markets are powerful enough to bankrupt large institutions. Small accounts can get eaten for breakfast and the market will still be hungry.


Every bull and bear market will be a little different than the last — so don't try to predict what will happen this time. 


Instead, react to what's happening and ride the waves as long as they last.

Don't pick a fight with bulls or bears. You'll lose every time.


The trend is your friend,


Paul Scolardi

Editor, Swing Trade Millionaires

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*Results not typical. Paul Scolardi teaches skills others have used to make money. Most who receive free or paid content will make little or no money. Most traders lose money. We do not guarantee any outcome regarding your earnings or income as the factors that impact such results are numerous and uncontrollable. You understand and agree you will consider the important risk factors in deciding to purchase any of our products or services. Past performance in the market is not indicative of future results.

This is for information purposes only as Millionaire Media, LLC is not registered as a securities broker-dealer or an investment adviser. No information herein is intended as securities brokerage, investment, tax, accounting or legal advice, as an offer or solicitation of an offer to sell or buy, or as an endorsement, recommendation or sponsorship of any company, security or fund. We are not a licensed investment professional, and we do not give investment advice. Always consult a licensed investment professional when seeking investment advice.

 

Millionaire Media, LLC cannot and does not assess, verify or guarantee the adequacy, accuracy or completeness of any information, the suitability or profitability of any particular investment, or the potential value of any investment or informational source. The reader bears responsibility for his/her own investment research and decisions, should seek the advice of a qualified securities professional before making any investment, and investigate and fully understand any and all risks before investing.

 

Millionaire Media, LLC in no way warrants the solvency, financial condition, or investment advisability of any of the securities mentioned in communications or websites. In addition, Millionaire Media, LLC accepts no liability whatsoever for any direct or consequential loss arising from any use of this information. This information is not intended to be used as the sole basis of any investment decision, nor should it be construed as advice designed to meet the investment needs of any particular investor. Past performance is not necessarily indicative of future returns.

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