12 Oct The Can’t-Miss Opportunity That Can’t Be Missed
The Can’t-Miss Opportunity That Can’t Be Missed
Oct. 12, 2022
I missed the massive Bull Market of 2009.
I missed 2020, too.
Because I was focused on Forex. Which isn’t a bad thing. Forex does well in Bull and Bear Markets.
But I’m furious I didn’t take some of my money and put it into stocks.
Trading stocks when a Bear Market turns into a Bull Market is one of the easiest, most lucrative things we can do with our money.
We have to have a system, though. Trying to use gut feel or blind holding on can end disastrously. Using a system can be a simple way to make life-changing money.
Great. But what system should we use?
There are many, of course. This week we’ll talk about the system used (in some form) by almost every triple-digit trader.
And here it is. Prepare yourself to be underwhelmed.
It’s a break above the 30-week Simple Moving Average (SMA) on a Weekly chart.
Why Weekly? Because it’s easy, robust, and keeps us out of the news and noise.
Why 30? Because it’s about half a year and the stock market allegedly always looks six months out.
Does it work?
Let’s take a look.
The biggest problem with stock trading is: Which stock should I pick? You can use the right system at the right time and make no money if you pick the wrong stock. Yes, there are ways to learn to pick good stocks. But why go through all that when there’s a much easier way?
Just trade an ETF. Better yet, trade an ETF that moves.
And QQQ fits that profile. This ETF tracks the Nasdaq 100. It has all the fast-movers in one place so it’s impossible to choose the wrong one.
Here’s how QQQ handled the Bear/Bull Markets of 2008-2009:
Notice on the left side of the chart how QQQ simply avoided the 2008 Financial Crisis? This is a Long-Only system so there was nothing to do but wait.
Then, in 2009, price crossed the SMA. Time to run to the charts! Actually, it’s easier than that. There can be false alarms, right? Not every move up is The One.
So this system waits for proof. It doesn’t enter a trade unless price has closed above the SMA for five weeks. We have over a month to get ready.
Then, on the 6th week, we get in.
How do we get out? You can pick anything you like but this simple system gets out after a close below the SMA. First it closes, then we exit on the open of the next week’s bar.
How did this system perform in 2009 using these ideas? It hypothetically made 29% on that May 2009 trade using no margin and no compounding. Everyone else lost 50% or more. We could have made 30% just on that one trade.
This system handled the Dot-Com crash, too:
That trade went for a hypothetical 35.5%.
And it also navigated the 2020 pandemic crisis:
Patiently waiting for our entry while the world was in chaos would’ve produced a hypothetical 52.8% win.
But does it work long-term? Yes. Here’s the Report since 2001:
But we don’t have to trade this system all the time (though we could). We could just trade it when Bear Markets hit.
So what do we do now? Nothing. Yet.
As you can see on the right side of the recent chart above, price is currently far below the SMA.
All we have to do now is save our money and wait.
A can’t-miss opportunity is around the corner–if we pay just a little bit of attention.
Is this the best we can do, though? Could we make more money?
We’ll talk about that in the next Newsletter.
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It should not be assumed that the methods, techniques, or indicators presented in these products will be profitable or that they will not result in losses. Past results are not necessarily indicative of future results. Examples presented on these sites are for educational purposes only. These set-ups are not solicitations of any order to buy or sell. The authors, the publisher, and all affiliates assume no responsibility for your trading results. There is a high degree of risk in trading.
HYPOTHETICAL OR SIMULATED PERFORMANCE RESULTS HAVE CERTAIN INHERENT LIMITATIONS. UNLIKE AN ACTUAL PERFORMANCE RECORD, SIMULATED RESULTS DO NOT REPRESENT ACTUAL TRADING. ALSO, SINCE THE TRADES HAVE NOT ACTUALLY BEEN EXECUTED, THE RESULTS MAY HAVE UNDER- OR OVER-COMPENSATED FOR THE IMPACT, IF ANY, OF CERTAIN MARKET FACTORS, SUCH AS LACK OF LIQUIDITY. SIMULATED TRADING PROGRAMS IN GENERAL ARE ALSO SUBJECT TO THE FACT THAT THEY ARE DESIGNED WITH THE BENEFIT OF HINDSIGHT. NO REPRESENTATION IS BEING MADE THAT ANY ACCOUNT WILL OR IS LIKELY TO ACHIEVE PROFITS OR LOSSES SIMILAR TO THOSE SHOWN.