Every trading year has ups and downs. Some have more than others. But all have three characteristics that repeat year after year.
Traders and investors should know, understand and swiftly monetize them.
Let’s see how repeated lessons have unfolded as we look to apply them to 2024.
Lesson No. 1: It’s Never as Bad as We Think
Within several days during March, three lesser-known banks failed. This triggered a sharp sell-off in the Financial sector, as seen in the XLF ETF chart below, and a quick rescue by regulators.
Think what you may about the whole ordeal. I certainly have opinions… But that’s not the point.
The point is that traders and investors thought the end was near, and many missed out on an incredible buying opportunity.
Lesson No. 2: It’s Never as Good as We Think
Small caps were a darling in 2021.
I recall multiple articles and videos late that year where money managers pontificated that the opportunity in small caps had arrived. Many said they had their highest weightings ever.
Some called this a “pure play” as small caps “broke out” while institutions said they liked the fundamentals.
All of this… right at the top.
Lesson No. 3: When Trading Setups Occur, Act
Multiple opportunities exist every year. They even existed many times in the two charts above.
When they set up, a trader and investor must not delay or second guess.
At the very beginning of November, this occurred after a long pullback that started in July, as shown in the Technology sector (XLK).
Traders and investors who were watching and ready were able to take advantage of gains that completely wiped out the four-month rut — and then some!
If you missed this run, should you beat yourself up? By all means… NO!
Get up, look forward and prepare for the next opportunity.
I see many in December already — and I’ll share them today at 4:05 PM ET.
Think and win!
Celeste Lindman
Celeste Lindman Trading
If you haven’t already, join my Telegram channel here for frequent trading insights and market musings!
*This is for informational and educational purposes only. There is an inherent risk in trading, so trade at your own risk.
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