The S&P is down 20% year to date, Amazon is down 50%, and Tesla is down over 60%. When is it time to start scooping up deals and take advantage of these attractive discounts? Let’s look for any clues we can see now and figure out which alerts will clue us in that things are starting to reverse.

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I am a huge fan of keeping things simple. And simply put, we are still in a downtrend even after multiple attempts to break out of it. What we do know is that this market is more nimble than a soccer mom who never misses a yoga class. In fact, it is just getting more volatile as the downtrend continues.

That volatility is the secret sauce right now that can make or break your trading strategy.

When you look at this chart of the VIX from a long term perspective you can see the PTSD the COVID crash had on the markets. Prior to 2020, a spike in the VIX to 20 was a big event. Now, 20 is where the VIX is finding support.

As we look to how to tell if things are going to level off and maybe recover, we will want to see the VIX at least calm down and level off a bit, even if it is at its new normal. We are also going to be watching the S&P to see that trend start to shift. While it is possible we can see one of these “V” bottoms actually find the strength to break above the trend, it seems more likely we will see the markets continue to fall, but slower. If we see a trend where the wild swings start to get smaller, that is a sign to start looking for the bargains.

It is tough to be confident in spotting that type of a reversal. It is nearly impossible to hit it right on the button so that means you could buy and have to stomach some more drawdown before the move plays out. Joe Duffy is one of the best at pinpointing where the momentum is heading. If you haven’t read is Little Black Book of Momentum Set Ups yet, it is a great way to get a laser focus on where the momentum truly is headed. You can grab it here.

Keep learning and trade wisely,

John Boyer

Editor

Market Wealth Daily