≈ Momentum just shifted. ≈

Traders,

Coach Tyler here.

Overbought pressures finally came to a head-on Tuesday. Indexes across the board formed a pivot high, with the Nasdaq seeing the most weakness. QQQ closed lower by 0.69%. I don’t know about you, but I’m finding the selling a relief. The ongoing advance entered orbit long ago and was wholly unsustainable.

For its part, QQQ was up nearly 13% over the past month. Virtually all of it came in a straight line. After such a relentless run, some profit-taking was more than justified. Rather than complain about the pivot that just formed, embrace the silver linings.

First, this will allow new patterns to develop and lower-risk entries to multiply. Did you really want to chase the likes of AMD, NVDA, TSLA, QCOM, MSFT, and others at their dizzying heights? I didn’t think so.

Second, pauses like this are what’s needed to create more sustainable trends. When stocks get scorching hot without any corrections along the way, it inevitably leads to swift, ugly reversals. Consider what just happened to TSLA as exhibit A. If you’re a short-term trader wanting to shift your exposure in response to the pivot, then you might have taken some profits, tightened stops, and otherwise de-risked throughout Monday and Tuesday. Another smart step is to compile a shopping list of the strongest stocks to buy if this pullback persists. The list of tech tickers mentioned above is a great start. 

#TeamTackle

Chart of the Day: Tesla Tumbles

Tesla plunged 12% Tuesday with 59 million shares changing hands. If the dramatic nature of the drop surprised you, then tuck this away as an essential lesson. Volatility slices both ways. And mega-cap stocks don’t just rise 50% over a few weeks without suffering some severe mean-reversion.

Video of the day: Trading Concept Check: What Are Pivots

Why are pivot points important to traders? Because they define price thresholds and trends. Watch this quick video to make sure you understand the concept and take advantage of the comprehensive S.T.E.P. Swing Trading System training and learn all the secrets of successful swing trading.

Today’s line up

Traders Lounge 11 PM EST

Join the coaches in this live lounge, ask questions, discuss ideas or just sit back and listen to veteran traders discuss market conditions.

The Coaches Show Replay

If you missed last night’s episode where Coaches Gino Poore and Tyler Craig talked about How to Select and Trade ETFs, or would like to watch it again, check it out here.

Halftime Report 12:30 PM EST

The Halftime Report starts at 12:30 EST and covers what news is driving the market, chart analysis from the movers and shakers of the day, and fun in a way that only Matt and Tim can deliver.

Trading Justice Podcast Episode 450: Understanding Market Funds

In this episode, Coach Greg Holmes joins us to have a discussion about Mutual Funds, Index Funds, and Exchange Traded Funds. Many investors use these vehicles to gain exposure to stocks, bonds, commodities. Market funds are the basis for many retirement accounts, as well. Listen in to Coaches Matt and Greg discuss how these products work, what the advantages and disadvantages of each of them are, and how fees impact your retirement returns over time.

Listen to the episode in the player below:

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