Trading in crashing markets

when a market crashes 3-4% there is usually some sort of bounce back within the next day or two. A good way to make a quick 10-20% or get into a great swing position is to do the following:

When you see the markets setting up for turmoil, put in an order that’s 20% or something ridiculous below the current price and see if it hits. If it does, you just got yourself a great deal.


When to invest in commodity cycles: it’s all about timing

“buy when there’s blood in the streets”
I think this holds true for major commodity cycles. Case study example is the coal industry. I’ve been watching for the bottoming of coal for damn near three years, but it’s kept going down and down and I’ve lost my ass trying to time the bottom. 

Now, the bottom may or may not be in, but after a 700% rally in ACI and a 250% rally in BTU, ACI with the most volume in two weeks ever, it’s looking more likely than ever before.

What set this event apart from the last ones is the bankruptcy of two major companies ANR and WLT. Both companies defaulted a couple months ago in June and July–blood on the streets. It important to remember that patriot coal and james River coal both defaulted about two years ago. These were weaker companies. 

We also got a major investment last week from George soros who disclosed a million shares in ACI and BTU respectively. 

So remember, when buying commodity bottoms, wait till some of the major major players in the game have given up and gone bankrupt. 

Then! Pounce on the near dead rat mutant rat that will give your portfolio superhuman strength.

From here I will be buying any pullbacks to near previous bottoms or possibly 10 week moving averages.

Wisdom 2

-Feeling the markets reactions-

When price breaks down sharply like it just did, the market becomes very sentiment driven. Short sellers pile in and investors looking for an opportunity to get out on an price rally can stop a rallying market in its tracks. This creates the multiple rallies and subsequent sharper selloffs characteristic of a bear market.

In these situations, gauge the market’s reaction to good and bad news to measure investor resilience.

If bad news comes out and the market sticks around or goes higher, this is a sign of string resilience. If it the market drops or worse, if it reacts weakly or negatively to GOOD news, watch out and get out.

Wisdom 1

Trade your best strategy during the bull and make tons of money. If it stops working over and over, watch out, the market might be a few months away from correcting.