Not many of you may be aware of the face that the markets are bullish at the moment. Your attention might be over in other markets, such as Forex or the crypto, but right now, both the UK and US stock markets are bullish. And today, we’re going to share with you three reasons why we here at Sublime Trading are long in the markets right now.
1) Historic recurrence
The market has a tendency to repeat itself, and we want to identify it. It is always helpful to look at the past and access today’s trends.
We want to recognise the time periods when the price goes into consolidation and when it starts to go on a bull run. This way, we can position ourselves for long opportunities in both UK and US stocks.
One pattern we’ve identified is an area of consolidation, which occurred around the same time last year as it did this year.
Last year, between September and November, the S&P started to consolidate. The price then broke out in November and went onto a long-term bullish trend all the way up to September 2021.
This year, the price started to go into consolidation between late August and October, which is around the same time period as it is in 2020. The price has since broken out of consolidation towards the end of October and has continued to remain out of the area of consolidation.
If history tends to repeat itself then the price may well continue to trend from now until September 2022.
And remember, you also want to have a long-term strategy – a trend following strategy – which will allow you to remain in the trend for the duration of the actual trend and to compound along the way.
2) The Indices
When we say indices, we are talking about the S&P 500, Dow Jones and NASDAQ. These three indices give us an indication of where the price may be heading next.
If all three indices are heading down, then we are likely to see a bearish market. If they are all heading up, this means that the markets have a strong bull momentum and are likely to continue heading to the upside.
If the prices in those are all moving sideways, then we might have a market where the price is moving sideways in the majority of the UK and US stocks.
Right now, all three indices are aligned into the upside, and they should therefore continue moving to the upside for the rest of the year.
As I mentioned earlier, we tend to see pullbacks in the market around September. Indeed, there was a period of time where the NASDAQ was lagging behind, but the other two indices were bullish. When this happens, we can still enter positions in both UK and US stocks but we want to tread with caution and maybe reduce risk.
The third reason why we are long in the markets right now is because we are literally in that time of year where trends start to form. We are now in November, so we’re still in that window where we can look for some long-term bullish opportunities in the market.
Pullbacks tend to happen in the market every February as well as September. And this year, we had a pullback in September which turned into an area of consolidation.
The prices have now broken out of that consolidation, and trends tend to form between October and December every year.
We are now in November, which is a crucial time to position yourselves for long-term bullish opportunity. Because, if the price trends till September the following year, and if you get in now at the start of the trend, you can potentially compound and maximizing your profits for the next 10 months.
1) Historic Recurrence: to identify repeating patterns in the market, to recognise when the price markets where the price starts to go into consolidation and where it tends to start trending. This allows us to understand when we should enter long positions.
2) The Indices: if the three indices, S&P 500, Dow Jones and NASDAQ, are all aligned, it is an indication that further bullishness will occur in the market.
3) Timing: enter long positions at the time frame where trends start to form. We can identify this time period by looking at past trends and the performance of the indices.
Not many people know about these three points, so you are at an advantage right now.
To get that extra edge over the market for long-term profit, you can use trend filters or other proprietary tools. We use our own trend filters which we have created, so that we can identify stocks that are outperforming the indices, allowing us to compound a lot faster along the way.
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