So the talking heads told us to sell.<\/p>\n
There were exceptions, of course. A few analysts dared to suggest the stock market was starting to look attractive. Those analysts were promptly mocked and ridiculed.<\/p>\n
“SELL,” everyone said as the S&P 500 fell as low as 4219 last Friday morning.<\/p>\n
Yesterday, the index approached 4400. And the talking heads are now telling us to buy.<\/p>\n
They were quick to change the narrative:<\/p>\n
We’re in the timeframe for a seasonal, year-end rally. The earnings season looks better than first thought. The Fed is done raising rates.<\/em><\/p>\n So, the talking heads all shout “BUY,” as the market trades 4% higher than when they told us to sell.<\/p>\n Of course, there’s nothing wrong with changing your mind. When the facts change, our opinions should change as well.<\/p>\n But these talking heads seem to have forgotten the most important, and simplest rule of investing in stocks: “Buy low and sell high.”<\/p>\n As traders, we can expand that rule to read, “Buy into oversold conditions and sell into overbought conditions.”<\/p>\n So, last Thursday as the stock market was hitting new lows for its decline phase – and as the talking heads were advising to sell – we suggested<\/a> traders should fight their emotions and buy into the oversold conditions.<\/p>\n However, on Tuesday<\/a> we warned that the first bounce off the lows would probably be short-lived.<\/p>\n Maybe now, as the talking heads have flip-flopped and are advising to buy stocks, it’s a good time for short-term traders to sell.<\/p>\n Take a look at this updated chart of the S&P 500…<\/p>\n <\/p>\n The S&P 500 has run up toward its 50-day moving average (MA) line near 4400. This is an obvious resistance level. The index is unlikely to break through that resistance on the first attempt.<\/p>\n So, you can expect some sort of pullback here.<\/p>\n Traders who bought stocks last week in anticipation of a short-term bounce should consider taking profits right here, as the S&P runs toward its 50-day MA.<\/p>\n <\/p>\n Free Trading Resources<\/strong><\/p>\n Have you checked out Jeff’s free trading resources on his website? It contains a selection of special reports, training videos, and a full trading glossary to help kickstart your trading career \u2013 at zero cost to you. Just click here<\/a> to check it out.<\/p>\n<\/p><\/div>\n<\/div>\n <\/p>\n And traders looking to put money to work in anticipation of a year-end rally should buy into any decline toward last week’s lows.<\/p>\n You’ll know when we get there because the talking heads will likely be telling you to sell.<\/p>\n Best regards and good trading,<\/p>\n Jeff Clark<\/p>\n <\/p>\n![\"Image\"](\"https:\/\/cdn.jeffclarktrader.com\/JMU\/images\/202310\/20231013-JMU-01.png\")
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