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Fear can destroy a stock in seconds.
But it can also lead to quite a bit of opportunity.
Look at Coca-Cola (KO), for example in late February 2019.
Early October 2018 was quite painful for the average investor. Last year, we saw the same problem with the Covid pandemic.
The major indices fell out of the sky. The tech-heavy NASDAQ fell from 8,100 to 7,300. The S&P 500 dropped from 2,925 to 2,725.
Buy low, sell high -- it’s an easy rule to follow.
Unfortunately, selling is often the hardest part.
“Jeez, if only I held that stock for one more day. I could have been up another $2,500” is often the thought process. What we fail to consider is that we made money. We accomplished the initial goal. Better yet, we didn’t lose anything.
Unbelievably, technical analysis is still written off as useless.
In fact, some denounce it as a laughable study of charts, patterns, and squiggly lines without any concrete or profitable results. Others argue it’s only good for short-term trading.
However, none of that is true.
When it comes to trading, one of the best ways to tell what’s happening is by paying attention to the flow of money in and out of a stock.
Surely, none of us want to buy a stock if money is flowing out, right?
With the incredibly popular Avengers: Endgame film, shares of Disney Co. exploded from a low of $107.50 to $142.50 in April 2019.
After the film grossed $1.2 billion in its opening weekend (biggest in history), analysts were still seen raising price targets. JP Morgan noted the stock could run to $150 a share by the end of the year.