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Holders of U.S. stocks can probably relate.
As we close in on the end of summer vacation season, the August beat down in stocks continues: The Nasdaq, S&P 500, and Dow Jones Industrial Average are all down over the last 30 days as of this writing.
And while the good news is August is over, the bad news is that September is here — another historically bad month for investors.
And I’m not saying that to sucker punch you folks.
I’m saying that because there are always moves to make if you know what to do — like our experts do at TradeSmith.
Because when you can get your emotions out of the way, you start to realize that a sell-off can be a “healthy” event because stocks move in cycles.
What goes up comes down and what goes down comes up.
Bull markets don’t last forever… but neither do bear markets.
You can put yourself on the side of more winning trades when you understand the power of patterns, cycles, and most importantly — the best ways to invest.
Today, I’ll give you three strategies to put to work so you can do just that.
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Strategy Prep No.1: Moves to Make Ahead of OctoberJason Bodner — the inventor of the Quantum Edge system — says that there are ebbs and flows to every market, with whipsawing action that opens the door to, and sets the table for, the “next” profit opportunities.
In addition to aligning closely with historical patterns, Jason also says that the recent market action fits the typical cycle of “Big Money” ebbs and flows.
The richest and smartest investors and funds on Wall Street typically follow a pattern within four phases.
Each of the four has its own “personality.” And recognizing each one — and understanding the best way to invest — can lead to big rewards.
The four phases are:
- Phase 1: Big buying, little selling. The rising tide lifts all boats.
- Phase 2: Buying slows, selling starts. The peak approaches.
- Phase 3: Buying virtually ends, selling grows. The pullback is here.
- Phase 4: No buying, lots of selling. The end of the downturn is in sight.
Being ahead of the game is key for those cycles.
You don’t want to be a heavy buyer near a peak… just like you wouldn’t want to be selling right before the flood of big money triggers a rebound.
Jason says his data tells us we’re likely in Phase 3.
Being that September is also a tough month for investors, expect more volatility as we head into Phase 4.
But once we’re in Phase 4, Jason predicts a huge finish to 2023, starting in October.
He’ll be following the Big Money buying activity with real-time data, giving him and his readers an edge on knowing the best moves to make and when.
And he has key moves to execute so you can be in the best position to profit.
Strategy Prep No.2: Create a Moneymaking WatchlistSir John Templeton, called “arguably the greatest global stock picker in the century” by Money magazine in 1999, understood market cycles better than anyone.
He knew that stock prices don’t stay down forever, which is why with the onset and panic of the start of World War II, Templeton had his broker order $100 worth of every stock selling for $1 or less — a total investment of $10,000.
When he liquated that position for four times his original investment a few years later, that $40,000 in 1943 would be worth $706,800 today.
But one of the issues for even the most patient of investors is that even “bargain stocks” can still drop in price.
That’s why Templeton suggested creating a watchlist in a 1988 Forbes interview:
“Always put your new investment ideas on a watch list, or take a small position before rushing in. If it’s a truly great bargain, there’s no need to hurry.”
If there are any stocks you’re eyeing after this sell-off but are worried about your timing, follow Templeton’s advice — make a watchlist.
You can keep close track of those companies, and as you start to see the price tick higher, you can start scooping up shares before a larger run-up in price.
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Strategy Prep No.3: Follow the Pendulum CodeThere’s a little-known phenomenon in markets that actually allows you to reliably predict price action on stocks days, weeks, months, and even decades in advance.
It all comes down to understanding the “code” behind market movements, which is something my team and I call “The Pendulum Code.”
The investment opportunities you can unlock looks like you’re actually predicting the future, with the potential to get in at the beginning of large market moves and get out right before they turn against you.
One of our team members here at TradeSmith is actually one of the world’s foremost experts on this market phenomenon.
His name is William McCanless.
On July 12, when William sent this alert out to our internal team, our “pendulum prediction algorithm” was signaling that Netflix Inc.(NFLX) was at a peak and was ready to reverse down…
William recommended a special trade to take advantage of the drop in Netflix.
Here’s what happened next…
He opened the trade on July 14. Netflix had a quick jump into earnings, but when earnings came out, the stock cratered despite the fact that earnings were actually strong.
Ultimately, he closed the trade for a 57% profit in just six days.
Another example is Micron Technology Inc.(MU).
Historically, this stock goes up between July 7 and July 16 according to 38 years of data. It does so a whopping 90% of the time for an average 7.4% gain.
William had a strong case historically and statistically to buy the stock, but when you add on our pendulum prediction algorithm — the case to go long got even stronger.
Take a look for yourself…
As you can see, July 7 corresponds directly to the bottom of this particular “pendulum swing,” which means the pendulum of the market is set to swing up.
Here’s what happened next…
Using a particular strategy, this trade could have made anyone who participated a nice 73.7% gain in just four days.