«Curious minds want to know.»
Traders,
At Thursday’s lows, the S&P 500 was -19.7% off its highs. Wall Street says it’s an official bear market if we’re down 20%. Close enough, I say! Besides, the Nasdaq and Russell 2000 and most sectors entered bear territory long ago. Tack on the implosion in growth stocks and a host of recent IPOs, SPACs, and other degenerates, and the evidence is overwhelming.
But here’s the thing. There are two types of bear markets. The first is more vicious, runs deeper, and lasts longer. The second is shallow and brief. It all comes down to the economy. A recession always accompanies the nastier downturns.
Which version we’re experiencing now comes down to whether we can avoid a recession. If you think the Fed will go too far and sacrifice the economy to kill inflation, you’re betting on this being one of the bad ones.
Alternatively, if you think the Fed will be nimble enough to curb inflation while not completely torpedoing the economy, you’re banking on this being one of the good ones (in a less bad way).
Only time will tell, but I’m certainly hoping that the worst part of the decline is over. And indeed, it is if this ends up being the second type of bear.
Video of the Day: How to Prep a Bearish Swing Trade
Explanation of how professional traders set up and prep a #bearish #swingtrade. They walk through entry stop and targets, as well as how they find each.
Chart of the Day: Two Types of Bear Markets
According to Ben Carlson, here’s the breakdown of all the bear markets in the S&P 500 since 1928. There’s been 25 in total. 14 occurred with a recession, and 11 occurred without one.
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.
Cash Flow Club Replay
If you missed last night’s webinar with Coach Gino Poore where he talked about Planning a Trade for Cash Flow Investing in this Environment 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.
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.
