How To Swing Trade A Stock Market Bounce | Podcast Episode #33

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Learn to trade, stocks successfully, learn to profit consistently. I’m Ryan Mallory. And on my weekly podcast, I’m going to teach you the in and out of a complex ever-changing stock market. If you will learn to trade better trait, smarter and profit bigger.

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Now let’s go trade. Hey everybody, this is Ryan. Mallory doing another episode with you guys here today and the topic for today. And what I really want to talk about here is Swing trading a stock market balance, because that is something that a lot of people are going to struggle with this, with this market.

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And because we’ve had a huge sell-off, a lot of people paranoid and a lot of people are are not going to know when to get back in. And there’s also going to be the other camp where they’re going to get back into soon or get over-leveraged. And they’re going to lose a lot more than if they just didn’t play the stock market at all. So, Let’s talk about swing trading a stock market balance, and in particular, and in particular with one that had just seen a massive sell-off.

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Like, what we saw last week, when the stock market share over thirteen hundred points on the Dow, and we saw an S&P 500 over the last two weeks, go from the 29 mid-20 900s, all the way down to the low 2700 wiping out, a couple months worth of profits.

1:26
For the S&P 500, small caps, got annihilated. NASDAQ solid down day of as much as 311 points on one particular day. So there’s a lot of bearishness but the big question becomes how do we how do we trade that kind of Market?

1:43
How do we prosper in such a market? Do we just accept the fact that we’re not going to be profitable or do we continue to have the expectation that we should be profitable and that we can be profitable and I would say that the answer is the latter of the two choices, we should be profitable and we should try to be profitable and and that’s what we’re going to talk about here.

2:03
So the first thing is to say when Seen a huge markets off when you can tell that the mood is different in the market that this isn’t is simply a five or six point, pull back or your typical 1%, so off. When you’re starting to see the Dow selling off, you know, six seven hundred points or even for 500 points.

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You’re seeing the SP hundred give up more than 40 or 50 points in a given day. That’s when, you know that there’s a completely different character or nature to this Market in that you have to start adjusting your approach to the market. You can’t just simply Buy the dip because that’s what’s work before that’s great when the markets just having tiny pullback.

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But when the markets having a huge sell-off, you don’t go buying the dip right away, okay? Because the balance may not happen and if you look at the S&P 500 chart from last week on Wednesday, the huge sell-off that we saw of basically like a thousand points.

2:57
Did it stop the next day? Just because we had a big sell-off. So if you bought the dip on Wednesday, you got slaughtered the next day. And at first, it looked like we were going to bounce higher, put it Didn’t it just sold right back off. So you have to let the extremes kick in first and one of the best ways that I like to do that is using this thing called T 2108.

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If you go to my website SharePoint a.com there is a sign-up link to get the warden charts but this is really good. This is one of the charts that I really love because it does the best job I’ve seen of any in terms of measuring Extremes in the market.

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And so the extremes or when it gets into the single digits. I mean, Even in the teens it starts to get pretty extreme. But I know almost every time when it gets into the single digits, we’re hitting some some serious Extremes in a bounces very imminent, we saw that back in February when it hit a low of 8.6 percent and just so that you know, the t21 08, it’s an indicator that measures the percentage of stocks trading above their 40-day moving average.

4:01
So when you have only about seven, eight, nine percent of stocks trading above their 40-day moving average. That’s a very good sign that this Market is getting way overheated to The sell side to the short side, and that there’s going to be a pretty big short squeeze as a result. And I think it works almost an any kind of market and it’s great for knowing okay, you know what, I’m not going to jump on this train you know after you have these two big down days, I’m not going to jump on the short train and start shooting again because you’re going to get squeezed here very soon.

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When you want to be shorting is up in the the 30s and the 40s it on this T 2108. That’s that’s when it’s a lot safer to be shorting the stock market. So Don’t do it when you have a reading in the T20 108 that has like, eight, nine percent, and that’s what we were getting on Thursday.

4:47
So and Friday. So the good thing is we bounced now. We’re able to identify the extremes. How much of a long position? Do I take on a market bounced? Well, that’s simple! You just do it one at a time.

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For me. I tend to put about 10 percent of my Capital down on one. One particular trait. I’m not going to go way above that, and I’m not going to go away below that. I’m just going to I treat every tree, pretty much the same. So when there is a big bounce, And the market playing out, I would buy one stock and if that stock starts becoming profitable, guess what I do.

5:28
I go by another stock and I’ll keep buying more and more as a as the bounce allows it. Now not all bounces are very clean. We’ve had this bounce in the S&P 500 for the most part for the better part of this week and it hasn’t been the easiest one.

5:47
Because if you take Friday, we sold off we balance we’ve it was just all over the place. It was a true roller coaster and then one day we sold off. Yesterday was the really the big bounce day where it just really clean. The clocks is shorter than today, we’re just kind of going sideways. So there’s not a lot of action there, but there has been opportunities for me to profit it hasn’t been as much as I would have liked for it to have been, but take Amazon today.

6:07
I bought it on yesterday. I bought it at 1783. I sold it today at 1823. It took a 2.2 percent profit. Yeah, maybe. I would have like four or five maybe even 10 percent on that trade. Okay? But those are more, you know. You know, hopes and dreams rather than actual reality.

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So 2%. I walked away from it. Good SSO. It was a bounce play. I got out of it. The day before the Big Bounce just because this Monday sell off, it wasn’t a very good. Look for the markets, I decided to go ahead and play it safe and get out. I took a one percent profit on that Amazon back on the 11th.

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I took a three point four percent profit so I have a couple of positions on right now. I do it one at a time because I Have to be all along right away because that’s the way that I’m going to really get destroyed on the stock market.

7:00
If I decide to go, I think the markets bottom, I’m going to go 100% long and then also then I’m wrong that could have happened on Thursday of last week and if I would have done that, I would have just gotten destroyed and given up all my profits in October and then some it would have been bad.

7:15
I would have been eating into other months profits and yet, here I am in October and unprofitable on the month, that’s a good thing. Ng. Here’s the other thing, keep the stops tight. Don’t don’t play these large stops and a lot of people when the markets are selling off, they feel like that they have to keep the stops very wide and it’s not necessary.

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You can still play the Stomps very tight, but you got to be particular about where you are getting in it. Keep this keep the stops tight. You don’t have to have a huge stop loss. That’s a myth. You can keep the stops just like you were before and according to your trading strategy and and, What that means is that you’re going to want to Target stocks at Key support levels.

7:59
You’re not just going to buy a stock because, oh, it’s sold off enough. It’s probably going to bounce. That’s not a justification. I’ve passed up on a lot of them because of that. But you take something like Amazon, right? You have a trim line all the way here, back off of the February lows. That’s held up perfectly and have tested it last week.

8:16
Hold it perfectly. And that’s when I got long, So that’s the kind of trade setups that you’re looking for. You don’t want to be getting long just because, you know, after it’s broken through support and it’s in a free fall because you don’t know when it’s going to bounce Apple. The same way here, look at Apple off of the April lows 427 lows.

8:37
It has this nice trend line. It’s holding it, it goes up it bounce. That’s a good thing. You take Google and I didn’t, I didn’t trade Google. But still the the this situation is the same thing here, going all the way back to 2016.

8:53
Perfect trend line that that Google held onto their you can see here, well, write up that trend line. So really good trading opportunities ones that you can make a good Buck off of. And in that you can keep the stops tight on.

9:09
So if Google doesn’t work out, it breaks below this trendline, okay? Then, you know, to get out, you don’t need to keep holding on to it because it just broke a major A little and play, the mega caps. You don’t have to I mean you can play large caps to but I would Target the stocks that have to go up if the markets going to bounce the mark markets, not going to bounce if apple and Amazon and Google the Do Not bounce.

9:30
That’s just the nature of this Market. If the markets up, 60 points, Apple, Amazon and Google are not going to be down, you know, one or two percent. If that’s the case, the markets going to be down to, there’s just too much influence their. So you want to Target the stocks that are going to That the market is going to go up because they are going up.

9:50
So the markets going up because apple is going up because Amazon is going up because Facebook’s going up or Google’s going up. You want to go after these really big companies so it also helps manage risk a lot easier to because if the market does take a 2% loss or a 3% loss on the day stocks like Square may take a eight or nine percent loss but Apple may only take like one or two percent loss.

10:16
And don’t take chances with profits man. If you have them in the markets not really showing you a clear hand take them. That’s why I took Amazon this morning, the market was just giving up all the profits and yeah it may still keep going higher but I took the profits am is on because I wasn’t willing to surrender those profits because they’re there to be cherished in this kind of Market.

10:35
You don’t play with those, maybe in a normal Market, you would give it a little bit more wiggle room, but you have to be aggressive with profit-taking and while I may give up some future gains and Amazon that isn’t preclude me from getting into another trade. So I went and jumped into CRM. We’ll see how that one does and I’m already an Apple so there’s there’s always going to be more opportunities but you have to protect profits, you can’t go ahead and rest profits because the market can reverse back down and take the, take the, take your profits with it.

11:04
So, that’s going to be today’s episode. I just wanted to talk to you guys about swing trading, stock market, bounces, how I do it, how I go about it, the best way to do it. And the ways that have really Benefited me well, over the years, I think this should be a huge benefit for for you guys and managing your trade successfully going forward and having the confidence to know that when you do face tumultuous times in stock market that you can get through them and prosper in the process.

11:30
So that’s going to be it. Thank you. And God bless. Thanks for listening to this week’s podcast of Swing trading with Ryan Mallory. I’d like to encourage you to join me in the SharePlanner Trading Block where I navigate the financial markets every day with Traders from around the world.

11:47
With your membership you’ll get a 7 day trial access to my trading room and text and email alerts. So go ahead and sign up by going to shareplanner.com backslash Trading Block. That’s www.shareplanner.com/trading-block backslash Lashes own and follow me at SharePlanner on Twitter and on SharePlanner’s, Facebook page, where I provide unique market and trading ideas every day.

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If you have any questions, please feel free to email me ryan@shareplanner.com or call the office at 321-522-6733 all the best to you and God bless.