The trading on Friday, Dec. 1, started off with "business as usual."
The grinding bull had been moving sideways, because the markets had Senate tax reform progress "baked in" for the past few "up" days. Still, the prospects were looking good, and most market watchers were anticipating a move higher.
Then I saw the major indexes start to tank.
A quick check of my fastest news feeds gave the answer: ABC News was reporting that former national security adviser Michael Flynn was prepared to say that President Trump "directed him to reach out to Russian officials during the campaign."
The market continued to drop.
And - snap! Just like that, we were in the grip of a very profitable extreme - one that's only poured fuel on my favorite December recommendation...
These Drops Are Really Big Opportunities
Buyers tried to come back out, but the drop resumed after a small, five- to seven-minute retracement:
After this move, the drop accelerated as other news outlets picked up on the story.
By about 11:40, there was a growing sentiment that that ABC News story was unsubstantiated.
Michael Flynn had plead guilty to charges of lying the FBI, to be sure, but ABC's report that, at Trump's request, Flynn had reached out to the Russians "during the campaign," was looking like so much "fake news."
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(Indeed, ABC issued a correction later noting that Trump had requested Flynn open talks with the Russians during the post-election transition, rather than during the campaign.)
The markets moved on this sentiment; they started to rebound and then head sideways for a couple of five-minute bars.
Friday now, I was looking for confirmation that the emotionally driven extreme had played out.
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I got that confirmation when the retest attempts at the daily low could not muster any more than 61.8% retracement.
So Friday's big drop is really just the perfect profit setup for what I've got in mind...
The Rebound Will Keep on "Bounding" into December
As we've seen, unsettling news - fake or otherwise - just isn't enough to keep this market down for long.
With a well-established, strong growth "narrative," there's always a "bid" underneath it these days - buyers ready to buy - and, as we saw yesterday, the bulls are back in full sway, and we're once again at record highs.
I think there's more to come.
You see, December is historically one of the market's strongest months. Play that strength correctly, and the gains can be big and fast.
The iShares Russell 2000 Index ETF (NYSE Arca: IWM) took a beating on Friday (along with just about everything else), and I think that only increases the upside there for traders this December.
Check out this video recommendation I made last week, with an easy-to-make trade on IWM shares - the last one of these delivered 50% gains in just five trading days and over 82% in 10 trading days.
It's already doubled, and December is just starting to pick up steam; I think, thanks in part to Friday's big drop, this could put some serious cash in your pocket before the holidays.
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