Every time a market heavyweight dips too far, too fast, buy.
Especially when fear has gotten way out of hand. And especially when technical indicators, including RSI, MACD, and Williams’ %R tell you a heavyweight is down too much.
Look at our General Dynamics (GD) idea from May 16, for example.
At the time, we noted, “It’s also over-extended on RSI, MACD, and Williams’ %R. The last time GD became this oversold, it would run from about $211.55 to $231.71. We’re hoping the same thing happens again this time.” Weeks after our mention, GD ran from about $210.71 to $217.99. However, with greed now outweighing fear, we believe GD could retest resistance at $231.
This just doesn’t happen with General Dynamics but with most heavyweight stocks. If you haven’t tried the strategy, test it out. Let me know what you think. We use something similar in most of my trading programs at Tradewins.