9 Minute Read

Tackle Today: Ignore the Hype….

October 4, 2021

By | No Comments

≈ Mind the History. ≈

Traders,

The recent market swoon has sent the media machine into overdrive. Headline writers are having a heyday spinning scary-sounding tales. Beware the taper! Buckle down for the bearish winds of seasonality! Supply chain kinks are going to kill Q3 earnings! Vaunted valuations give a grim outlook! I could go on.

It’s hard to take such hyperbole seriously when the S&P 500 is ripping higher, but combine these nasty narratives with a sinking stock market, and even it’s easy to find yourself giving in to the pessimism.

Until you put things in historical context, that is.

Did you know that the average intra-year pullback is -14%? In other words, every single year (on average), stocks plummet 14% for one reason or another. You’ll find the financial media whipping up all sorts of fearmongering to accompany each decline. And yet, despite these seemingly world-ending episodes, the stock market has gone on to continue churning out average annual returns of 10%.

Corrections like this are a feature, not a bug. If you find the current theater surprising, it’s likely because the abnormally low volatility we’ve witnessed in 2021 has lulled you into a false sense of security. Recency bias has you thinking downturns worse than a few percentage points means something is wrong.

Let me be clear. Drops like what we’ve witnessed over the past month are as common as dirt. In fact, if this is as low as we go (call it -5% from the peak), this will actually be one of the more benign intra-year downturns in history.

So says the chart of the day.

#TeamTackle


Chart of the Day

The Normality of Pullbacks

Source: LPL Research

Nothing like a clean 41-year history of market performance to set your expectations straight. The yellow line reveals the average annual pullback is -14.2%. So we could drop another 10% from here, and it wouldn’t signal anything abnormal.


Video of the day

Coach Frank’s Charts


Watch this clip from Friday’s Halftime Report where the coaches analyze Frank’s charts and discuss their potential trading setups on stocks like Horizon Therapeutics, Applied Materials, Intercontinental Exchange, Anaplan, TreeHouse Foods, Walgreens, and Corteva.


Today’s line up

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.

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.

Weekend Reports

Watch the Stock, Options, Commodity, and Forex Reports to help you prepare for the week.


Tackle Trading: Financial Freedom is a Journey. Sign up now for a 15-day free trial.

Financial freedom is a journey

Sign up now and gain unfettered access to all of the quality content and powerful Scouting Reports that our Pro Members enjoy for 15-days absolutely free with no strings attached and let us show you what your trading has been missing.


Legal Disclaimer

Tackle Trading LLC (“Tackle Trading”) is providing this website and any related materials, including newsletters, blog posts, videos, social media postings and any other communications (collectively, the “Materials”) on an “as-is” basis. This means that although Tackle Trading strives to make the information accurate, thorough and current, neither Tackle Trading nor the author(s) of the Materials or the moderators guarantee or warrant the Materials or accept liability for any damage, loss or expense arising from the use of the Materials, whether based in tort, contract, or otherwise. Tackle Trading is providing the Materials for educational purposes only. We are not providing legal, accounting, or financial advisory services, and this is not a solicitation or recommendation to buy or sell any stocks, options, or other financial instruments or investments. Examples that address specific assets, stocks, options or other financial instrument transactions are for illustrative purposes only and are not intended to represent specific trades or transactions that we have conducted. In fact, for the purpose of illustration, we may use examples that are different from or contrary to transactions we have conducted or positions we hold. Furthermore, this website and any information or training herein are not intended as a solicitation for any future relationship, business or otherwise, between the users and the moderators. No express or implied warranties are being made with respect to these services and products. By using the Materials, each user agrees to indemnify and hold Tackle Trading harmless from all losses, expenses and costs, including reasonable attorneys’ fees, arising out of or resulting from user’s use of the Materials. In no event shall Tackle Trading or the author(s) or moderators be liable for any direct, special, consequential or incidental damages arising out of or related to the Materials. If this limitation on damages is not enforceable in some states, the total amount of Tackle Trading’s liability to the user or others shall not exceed the amount paid by the user for such Materials.

All investing and trading in the securities market involves a high degree of risk. Any decisions to place trades in the financial markets, including trading in stocks, options or other financial instruments, is a personal decision that should only be made after conducting thorough independent research, including a personal risk and financial assessment, and prior consultation with the user’s investment, legal, tax and accounting advisers, to determine whether such trading or investment is appropriate for that user.

Leave a Reply

Chart Modal

Tackle Trading