«Return of capital > Return on capital.»

Traders,

Here’s a phrase I once heard about falling stock prices:

“If they don’t scare you out, they’ll wear you out.”

I couldn’t think of a more appropriate description of the current environment. Think about the meaning. When stocks break support and move into a downtrend, it creates legions of bagholders. We call them underwater longs. They are bulls with losing positions that now desperately want to get out at breakeven or less of a loss. This creates a lot of overhead supply that takes time to chew through.

The more severe the decline, the longer it takes to recover. With Friday’s selloff slamming the S&P 500 back below the 200-day moving average, bears have reasserted themselves and denied a quick return to an uptrend.

This is becoming a patience-testing slugfest for those that enjoyed the relatively easy conditions of 2021 and quick profits. The thought of this taking months to resolve itself is annoying. But it’s a reality. Return of capital trumps return on capital. And the best way to protect your dough when the storm is raging is not to take dumb risks. Unfortunately, until the market’s technical conditions improve, I think there are a lot of dumb risks out there.

Don’t get worn out. Better conditions lie on the horizon. But you must be here when they return.

Video of the Day: Options Trading 101: How to Swing Trade with Options

Join us to learn how to use two simple options trading strategies – the Long Call and Long Put – when Swing Trading.

In this webinar you will learn:

✅ What is Swing Trading
✅ How to use Technical Analysis to identify entry points
✅ What is a Long Call Option
✅ Long Call Risk Graph
✅ What is a Long Put Option
✅ Long Put Risk Graph
✅ How to Swing Trade with Options

Chart of the Day: Gold glitters

Gold prices are percolating. The yellow metal is trying to break through resistance at $1,875. Gold miners ($GDX) are perking up as well.

Today’s line up

Tales of a Technician: The Math of Scaling In

Today’s video looks at the difference between FIFO (first in, first out) and LIFO (last in, first out) in the context of scaling into a position.

Traders Lounge 11 AM 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 8:30 PM EST

This is our weekly MasterMind group. Join the coaches tonight, 8:30 PM EST to discuss the markets and help you prepare for the week.

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.

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