Anyone who's been watching stocks for the past few days knows that it's starting to look scary out there. In my review at the beginning of the week, I said we could be in for a rough ride if the S&P 500 breaks below a key support level at 4200, and guess what? It did.
While I still believe, and have been saying for a while, that we're in the opening stages of a new bull market in the long-term, I've also been saying that there would be some turbulence along the way. We're definitely in one of those periods now. And while the market is trying to push higher and we may see some pops here in the near future, I would be very careful about trusting them, because it's more likely to be what's called a dead cat bounce than a real rally.
If you've never heard the term, a dead cat bounce is a momentary recovery during a period when markets are falling, and it often happens because of short covering by market makers and institutional traders. But it never lasts, and if you're not careful, you can lose your shirt as the stocks you just bought quickly give up their gains and keep plummeting.
The bottom line is, there just aren't any good positive catalysts right now to sustain an upward trend for equities, and there's even a chance the market correction we're seeing now could potentially worsen further into full-blown bear market territory.
Because there's a lot of ground to cover here, I made this video so you know what to be looking out for during this volatile span, what conditions will keep dragging markets down, and what's needed to turn things around.
Be careful out there, folks. Make sure you have your stops in place, and I'll be back with you next week to make sure you're forewarned and forearmed.
The post How to Navigate This Week's Stock Market Turbulence appeared first on Total Wealth.
About the Author
Shah Gilani boasts a financial pedigree unlike any other. He ran his first hedge fund in 1982 from his seat on the floor of the Chicago Board of Options Exchange. When options on the Standard & Poor's 100 began trading on March 11, 1983, Shah worked in "the pit" as a market maker.
The work he did laid the foundation for what would later become the VIX - to this day one of the most widely used indicators worldwide. After leaving Chicago to run the futures and options division of the British banking giant Lloyd's TSB, Shah moved up to Roosevelt & Cross Inc., an old-line New York boutique firm. There he originated and ran a packaged fixed-income trading desk, and established that company's "listed" and OTC trading desks.
Shah founded a second hedge fund in 1999, which he ran until 2003.
Shah's vast network of contacts includes the biggest players on Wall Street and in international finance. These contacts give him the real story - when others only get what the investment banks want them to see.
Today, as editor of Hyperdrive Portfolio, Shah presents his legion of subscribers with massive profit opportunities that result from paradigm shifts in the way we work, play, and live.
Shah is a frequent guest on CNBC, Forbes, and MarketWatch, and you can catch him every week on Fox Business's Varney & Co.