MA<\/strong><\/a>) on two previous occasions.<\/p>\nQQQ has tested the 200-day MA three times.<\/p>\n
Each test was successful. Each test led to an immediate rally. And, each test ultimately proved to be an excellent buying opportunity for investors.<\/p>\n
Granted, it is difficult to be a buyer of stocks when it appears that the markets are falling apart. As we\u2019ve seen time and again, though, that is often the best time to buy.<\/p>\n
The caveat here is that the tests of the 200-day MA are only successful in a bull market. At the start of a bear market \u2013 like in early 2022 \u2013 the indexes sliced right through their 200-day moving average lines, and are sharply lower months later.<\/p>\n
The Risk\/Reward Setup\u2026<\/h2>\n
Of course, we can only know if a test of the 200-day MA is successful in hindsight, after the fact. There\u2019s no way to know ahead of time.<\/p>\n
So, there is some risk to buying stocks right here.<\/p>\n
The saving grace, however, is stocks don\u2019t go down (or up) in a straight line. Technical conditions are often quite oversold by the time the indexes test their 200-day MAs.<\/p>\n
Even if the test fails, the indexes are set up for an oversold bounce back towards their 200-day moving averages \u2013 if only to relieve the oversold conditions before turning lower again.<\/p>\n
For example, consider what happened in early 2022, at the start of that bear market. Investors who bought SPY at $425, or QQQ at $360 as they tested their 200-day MAs, suffered initially as the indexes lost support.<\/p>\n
But, it didn\u2019t take long before the indexes put on an oversold bounce \u2013 where investors could have exited the trades near breakeven before a more significant decline took hold.<\/p>\n
Both SPY and QQQ closed Monday near their 200-day moving averages. If we\u2019re still in a bull market, then this will prove to be an outstanding time to buy stocks.<\/p>\n
On the other hand, if we\u2019re at the start of a bear market, then investors who buy right here might have to endure some short-term pain before they get an oversold bounce that allows them to exit the trades at near breakeven.<\/p>\n
In other words, the risk\/reward setup to buying into the current conditions is excellent.<\/p>\n
Best regards and good trading,<\/p>\n
![\"Signature\"](\"https:\/\/files.jeffclarktrader.com\/global\/signatures\/jeff-clark-signature.png\")
<\/p>\n
Jeff Clark
Editor, Market Minute<\/em><\/p>\n\n
Free Trading Resources<\/strong><\/p>\nHave you checked out Jeff\u2019s 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<\/div>","protected":false},"excerpt":{"rendered":"The risk\/reward setup for buying into the current conditions is excellent.<\/p>\n","protected":false},"author":100,"featured_media":0,"comment_status":"closed","ping_status":"0","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"ep_exclude_from_search":false,"service":"","footnotes":""},"categories":[1],"tags":[],"publication":[10],"person":[7],"newsletter-type":[],"ticker":[],"class_list":["post-23387","post","type-post","status-publish","format-standard","hentry","category-market-minute","publication-market-minute","person-jeff-clark"],"acf":[],"ai_tts_audio_outdated":false,"ai_tts_legacy_post":false,"_links":{"self":[{"href":"https:\/\/jeffclarktrader.com\/market-minute\/wp-json\/wp\/v2\/posts\/23387","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/jeffclarktrader.com\/market-minute\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/jeffclarktrader.com\/market-minute\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/jeffclarktrader.com\/market-minute\/wp-json\/wp\/v2\/users\/100"}],"replies":[{"embeddable":true,"href":"https:\/\/jeffclarktrader.com\/market-minute\/wp-json\/wp\/v2\/comments?post=23387"}],"version-history":[{"count":13,"href":"https:\/\/jeffclarktrader.com\/market-minute\/wp-json\/wp\/v2\/posts\/23387\/revisions"}],"predecessor-version":[{"id":24953,"href":"https:\/\/jeffclarktrader.com\/market-minute\/wp-json\/wp\/v2\/posts\/23387\/revisions\/24953"}],"wp:attachment":[{"href":"https:\/\/jeffclarktrader.com\/market-minute\/wp-json\/wp\/v2\/media?parent=23387"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/jeffclarktrader.com\/market-minute\/wp-json\/wp\/v2\/categories?post=23387"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/jeffclarktrader.com\/market-minute\/wp-json\/wp\/v2\/tags?post=23387"},{"taxonomy":"publication","embeddable":true,"href":"https:\/\/jeffclarktrader.com\/market-minute\/wp-json\/wp\/v2\/publication?post=23387"},{"taxonomy":"person","embeddable":true,"href":"https:\/\/jeffclarktrader.com\/market-minute\/wp-json\/wp\/v2\/person?post=23387"},{"taxonomy":"newsletter-type","embeddable":true,"href":"https:\/\/jeffclarktrader.com\/market-minute\/wp-json\/wp\/v2\/newsletter-type?post=23387"},{"taxonomy":"ticker","embeddable":true,"href":"https:\/\/jeffclarktrader.com\/market-minute\/wp-json\/wp\/v2\/ticker?post=23387"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}
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