9 Minute Read

Tackle Today: Rallies are Suspect

October 6, 2021

By | No Comments

So says the trend. ≈


Do you know why rallies in a downtrend usually fail? It’s the same reason that dips are generally buying opportunities in an uptrend. We could remind you that a trend in motion stays in motion, but let’s dig a bit deeper.

Suppose you bought the S&P 500 at higher prices. Given the recent rug pull, you are underwater and desperate to recoup losses. Up days bring you closer to breaking even. But, once you get there, emotions urge you to jump ship. You are what we call overhead supply, a seller into strength.

The longer the downtrend lasts, the more bag holders enter the equation. Each failed rally adds to the pessimism and expectation that future ramps will falter. Thus, the price decline becomes a vicious cycle.

No one knows how long the current downtrend will last. Maybe we’ve seen the worst of it; perhaps it’s just begun. Those who got defensive when we first broke the 50-day and reduced risk further into the subsequent mid-September bounce are reaping the rewards of their defensiveness.

We’ve now seen four consecutive sessions of 1+% moves. Worse yet, each day has reversed direction, sowing confusion more than anything. If the last two green sessions getting stuffed doesn’t convince you that rallies are suspect, I don’t know what will.


Chart of the Day

Bitcoin Breaks Out

Bitcoin blasted through $50k on Tuesday. September’s breakout attempt was swiftly rejected. This one looks healthier. Let’s see if the mighty crypto can go the distance.  

Video of the Day

The Queen’s Court

In this week’s edition of the Queens Court, the coaches bring separate trading picks for Coach Emily including IMAX, Union Pacific, and the Financial Sector ETF. Will she accept the trade ideas, or will she lop off the coaches heads?

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.

Trade Masters 7 PM EST

Join us every Wednesday at 7 PM EST on YouTube as the Coaches go over trade ideas from the Trade Master’s crew!

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