Whenever the stock market gets close to hitting all-time highs, there’s always a group of traders asking me when to fade certain stocks.
But that’s actually a terrible way to approach the situation…
Traders should never want to fade strength.
I mean, the strongest stocks have a ton of traders that only continue to buy, buy and buy some more. And when they cool off, they’re going to be less likely to liquidate the stock than traders who have been in a bad position for the past six to eight months.
So it’s important for us traders to learn exactly when to fade stocks…
Learn When to Fade Stocks the Right Way
Just think about it logically…
Here’s what the SPDR S&P 500 ETF Trust (NYSEArca: SPY) looked like when I filmed this video:
The SPY, which of course tracks the S&P 500, just made an all-time high, which means anyone who bought it before this level up is making money.
If they’re profitable and the market starts to cool off, they may think to themselves, “Hey, the sentiment is really good and the SPY is great, so I’ll just hold onto it.”
That’s one of the reasons why the highs just keep on going higher…
And the more bullish sentiment is, the more important it is for us to know when to fade stocks.
So the point I’m making is that it’s much better to fade a stock that’s in a strong downtrend than to try to fade a strong stock like Microsoft Corp. (Nasdaq: MSFT).
Check out my short video below to learn more about when to fade stocks the right way.
A lot of traders are making this big mistake, so hopefully my video will help you avoid it going into the future… and save you a few bucks!
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P.S. The past year of Burn Notice Alerts has brought Joy of the Trade’s Jeff Zananiri and his traders so many opportunities.
Some of his readers have even seen winners like 78% OSTK…on 113% on JOE… and 126% on FB… all overnight!
And that doesn’t even include the 4-for-4 they went in trade recommendations for the service last week!
There’s so much to celebrate, Jeff would like to raise a virtual toast to commemorate the success and look forward to 2022 — and beyond!