Hey, Ross here:
Yesterday I cautioned against using single-day moves as confirmation of a trend (or trend reversal).
Today, let’s look at how “dead cat bounces” can lull too many traders into a false sense of security.
Chart of the Day
During the tariff selloff last year, after the S&P 500 had fallen about 10% – it rebounded briefly by about 5%.
It even reclaimed its 200-day moving average (red line on chart) during the bounce.
But it was what we call a “dead cat bounce” – and the index plunged another 14% soon after before bottoming out.
This time around, the index fell as much as 9% from its recent high.
And in the past two days, it’s rebounded close to 4% – and looks pretty close to reclaiming its 200-day moving average.
Now, am I saying that this is for sure a “dead cat bounce”?
Of course not.
I’m just saying we shouldn’t get too easily lulled into a false sense of security.
Now, like I said yesterday, I don’t believe that we’ll get dragged into a bear market this time around.
But that doesn’t mean we should see a minor recovery and immediately assume that everything is going to keep going up again.
Still, that doesn’t mean there aren’t buying opportunities right now.
Take a look at this chart.
The data used to create this chart is about a week old.
But the general conclusions still apply.
This year, the negative stock returns have been caused by contraction in valuation multiples – not earnings, which are still growing.
I explain its implications below.
Insight of the Day
There are still many stocks out there with “independent” rerating catalysts.
One of the biggest mistakes traders make is treating the market like everything moves for the same reason.
It doesn’t.
Yes, the broad indexes have been under pressure because valuation multiples have compressed.
But that doesn’t mean every stock is now dead money until the whole market turns back up.
Some stocks have independent catalysts that can drive them higher even in a messy tape.
It can be a takeover, a major contract win, a big approval – many things.
And if you can target stocks with these upcoming independent catalysts, you can still go after major wins – even if the market takes a while more to recover.
But when it comes to targeting these stocks, traders often ask the wrong question.
They ask – how do we know which stocks have these catalysts coming?
Instead they should be asking – who knows whether these catalysts are coming before the market does?
And the answer is the corporate insiders…
The high-ranking execs like CEOs and CFOs openly buying up their own stock before these independent catalysts materialize.
I’ve seen the insiders snap up stocks before major drug approvals, massive contract wins, and many more.
And right now, even amid this painful selloff, they’re still buying.
That’s why tomorrow, Friday April 3 at 11 a.m. Eastern…
I’m going LIVE to show you my proven strategy for following these insider trades.
I’ll walk you through everything you need to know to start effectively using this strategy for yourself, including:
- Where to find these insider trades before everyone else catches on
- The must-know “insider traps” traders fall for when trying to follow the insiders
- My top 3 counterintuitive insider buying signals I’ve been testing for years
I’ll also share the details on a big insider opportunity that just appeared on my radar.
My walkthrough tomorrow is free, but I’ll need you to register.
So click here to register for my live insider walkthrough tomorrow…
And I’ll see you Friday morning at 11 a.m. ET.
P.S. If you’re planning to attend on a mobile device, make sure you download the presentation app now so you don’t miss anything when it starts. See you there.
iOS: https://apps.apple.com/us/app/goto/id1465614785
Android: https://play.google.com/store/search?q=goto&c=apps
Customer Story of the Day
“Traders Agency is the best thing to happen to me.
This team of stock gurus has educated me and helped me start earning money in my portfolio.
Been using the methods that TA teaches for 3 months now and increased my earnings.
Shout out to the Cartier Family for having Ross on their YouTube!
This is not a get rich quick scheme, this is to educate you on how to read the market and make decisions to earn money.
Thank you Ross and team for passing on your knowledge to me.
Looking forward to what the future holds.”
Ross Givens
Editor, Stock Surge Daily
