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It’s time to think about year-end strategies.
And while some are ridiculous and unworthy of attention, we have three favorites, including the “New Year’s Resolution,” and “the Dogs of the Dow.”
The idea that drawing lines on a chart can make you money has been a matter of contention for years. But the fact remains that those lines are quite helpful.
You see, the key to the lines’ effectiveness lies entirely in its popularity among large audiences of traders. We’re talking about thousands, if not millions of traders looking for these very opportunities based on nothing more than support and resistance.
Early October 2018 was quite painful for the average investor.
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.
When bungee jumpers plummet off a bridge, what happens?
They pop back up, right?
The very same thing happens with stocks when they become too overbought or oversold. And if we can position ourselves for the exact moment the “snap back” happens, we can make money. And it’s actually quite easy to spot.
Over the last 22 years, I’ve heard countless arguments for and against fundamental and technical analysis. While neither is perfect, they both have strengths we can capitalize on.
Fundamental analysis shows us what’s under the hood.
Meanwhile, technical analysis helps us see the psychology of the masses.
When it comes to technical analysis, moving averages are essential.
For example, for more than 20 years, I’ve relied on two specifically – the 50-day and the 200-day simply moving average. Not only am I looking for crossovers for golden and death crosses, I want to see if a stock is holding its own above them.