Understanding the difference can mean a growing account vs getting wiped out. There are signals that will help you tell the two apart.
This week, we have seen many stocks getting dragged down by the broader market and fears on more inflation. Some of those stocks are more valuable then where they currently are priced. If this is just a dip then it is a bargain and scooping it up could be a big win. But if it is truly a deeper downtrend, it could be an extremely costly trade. Take a look at Tesla for example.
We can see that in the drop at the end of the last year there were a couple dips, albeit in a downtrend so they are inverted. It is essentially the same. Both of these are failed reversals. Now look at the recent consolidation since the beginning of Feb. It is shaping up to be a potential reversal, but could be a just a dip. Anyone who missed out on grabbing some TSLA at the beginning of the year might be tempted to jump in now thinking this is their rare second chance.
The tough part is the signs are showing it is a reversal. The last move created a new low for the month and we saw the MACD crossover to the down side from an elevated height.
Knowing how to spot where the momentum is pushing the stock is a powerful tool. Lee Gettess has some incredible signs he looks for to confirm the trend and use it to increase his winning results. Be sure to check out his guide here.
Keep learning and trade wisely,
John Boyer
Editor
Market Wealth Daily
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