On Monday, the Federal Reserve came out with a bold promise: to rescue the American economy and workers.
Bloomberg Radio reporters called it “Quantitative Easing: Kitchen Sink.”
That’s because the Fed is using every tool to ease the pain of the coronavirus and mass quarantines.
I expect the market to bounce in the days ahead.
But it won’t last.
Readers need to watch this one indicator to profit from the coming sell-off.
Watch for Strength in the Rebound
The black line is the S&P 500 Index. The red line is the 14-day relative strength index (RSI).
RSI is a tried-and-true indicator. It shows the strength of price action.
When at extremes, it is used to signal short-term changes in direction.
In 2018, the market sell-off brought RSI down to an extreme low.
That’s when the selling paused.
But it can also be used to get a sense of a trend’s strength.
And that’s what we’re watching for.
Is it the beginning of a new bull market or a trap before the next leg lower?
The Fear That Moves Markets Is Healthy
Extreme volatility is scaring investors.
But fear is always part of markets because markets are rooted in human decisions.
Investors and traders make decisions based on fear and greed. And right now, fear is driving markets.
But we can use fear to spot patterns.
I use my Apex Movement Patterns (AMPs) to predict price action.
It’s part of the Apex Profit Alert premium research service. I use this system to spot moves that have the potential for triple-digit gains in any environment.
When the market started a deeper decline at the end of February, this system got my subscribers into trades that gained triple digits when stocks fell.
That meant readers had the chance to grab gains as high as 355%!
My system tells me stocks are going to rebound in the short term. And more triple-digit gains are possible.
I’ll be looking to indicators such as RSI to know the weakness or strength at important points in the stock market’s price pattern.
If RSI can hold in a range around 50 for a few weeks, it will be a sign that buyers are willing to bid up stocks again. Only after that point can we begin to think the stock market has bottomed.
If you’re itching for the buying opportunity of a lifetime, be patient.
If RSI cannot break and stay above 50 when the S&P 500 rebounds, then stocks will weaken and make new lows.
You can still make money when RSI signals a weaker market ahead.
Apex Profit Alert finds put options that give readers the chance at triple-digit gains.
Click here to learn more about this strategy and how you can join in on potential wins.
Good investing,
Editor, Apex Profit Alert