After seven down days in a row, the markets roared back Monday and appeared to erase last week's sharp declines.
Now, Monday's action looked impressive by any measure… but the "green" chart I'm about to show you told me that we were looking at something other than the start of a sustainable rally.
And just as I thought, the markets headed lower again yesterday.
I'm not worried, though – and you shouldn't be either. Volatility like we're seeing now means we're looking forward to much bigger potential gains…
Why a "Dead Cat Bounce" Is Actually Healthy
This is the chart I saw on Monday that told me just what to expect on Tuesday. Take a good look at the colors – not the numbers.
I've only seen green across the board a handful of times after a sustained decline, and each time it's meant a "dead cat bounce."
If you've never heard the term, that's a trading euphemism meaning that a security – or in this case the broader markets – makes a temporary recovery from a prolonged decline only to be followed by a resumption of lower prices.
To be honest, many people hear this and freak out. Don't.
"Lower prices" are not synonymous with a "crash," even though many investors will interpret the possibility that way. They're simply an opportunity others don't yet recognize.
I'm actually thrilled to see the markets move up AND down because it means that they're acting normally.
There's always buying and selling.
It's something we've used to our advantage repeatedly in the Money Map Report with recommendations like Altria Group Inc. (NYSE: MO), Raytheon Co. (NYSE: RTN), and Becton, Dickinson and Co. (NYSE: BDX), which are all sitting on triple-digit returns of 270.66%, 166.97%, and 114.65%, respectively.
More to the point though, every new bout of volatility shakes the weak money out. It gets scared and runs for the hills, which inevitably means more profit potential for you.
About the Author
Keith Fitz-Gerald has been the Chief Investment Strategist for the Money Morning team since 2007. He's a seasoned market analyst with decades of experience, and a highly accurate track record. Keith regularly travels the world in search of investment opportunities others don't yet see or understand. In addition to heading The Money Map Report, Keith runs High Velocity Profits, which aims to get in, target gains, and get out clean, and he's also the founding editor of Straight Line Profits, a service devoted to revealing the "dark side" of Wall Street... In his weekly Total Wealth, Keith has broken down his 30-plus years of success into three parts: Trends, Risk Assessment, and Tactics – meaning the exact techniques for making money. Sign up is free at totalwealthresearch.com.