≈ Fading Fear will Work Until it Doesn’t≈

Traders,

Stocks are jumping this morning in a continuation of the rebound. Yesterday’s Fed announcements delivered the goods, and traders are back to the business of buying. If you were betting this selloff was the long-awaited trend killer, the big kahuna, the much-needed comeuppance for fattened pigs and starry-eyed holders – well, you were wrong.

I don’t blame traders for getting defensive with Monday’s nasty drop. It made the S&P 500 look the worst I’ve seen all year long (given how far below the 50-day moving average we probed). But, once again, the power of the trend reigned supreme. Dip buyers were rewarded for the umpteenth time, and sticking with what’s been working ultimately prevailed.

Bulls who stuck to their guns and avoided panicking have now been made whole. Maybe we feint lower again; maybe we don’t. All I know is this in a long line of episodes proving that those who keep their wits about them when corrections strike are best equipped to brave the drama and come out the other side recouping losses the quickest.

As for today’s title, well, look at the VIX chart below. Once again, betting that a VIX spike is temporary has proven wise.

#TeamTackle

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Chart of the Day

Mr. VIX Says the Crisis is Over for Now

The Bear Market Survival Guide features a trade idea called “Fade the Fear.” It involves betting that VIX spikes are transitory. This week’s rapid-fire mean reversion is the ideal outcome for those who stepped into the panic on Monday and sold options.   

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Video of the day

Trade Masters

Join Coaches Greg Holmes and Cody Maki for another edition of Trade Masters.

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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.

Cash Flow Club 8:30 PM EST

Join Tyler Craig as he hosts the weekly Cash Flow Club.

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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.

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