The stock market has been soaring and we’re not seeing any obvious signs that it’s going to stop.
At least for a while longer.
But there’s no denying the stock market is way overbought.
We’re long overdue for a correction.
And if we get one, what happens then? Can we still make money?
Yes, if we look for value trades.
Here’s an example.
Back in 2022, TCOM (Trip.com) took a hard hit. No one wants to take luxurious trips during a tough Bear Market.
And TCOM fell down below “fair value” and hit its bottom Bollinger Band™.
Here’s the chart:
From March until June 2022, the stock moved along the lower Band (length 800, deviation -2) at around $20.
During that period, the “fair value” moving average line was up around $30.
If we entered sometime in the March to June period at $20, we would have reached our “fair value” target of $30 in early October.
That’s about a 50% gain in a few months.
In a Bear Market!
If we do get a correction, it doesn’t have to be a bad thing.
It could be a chance to capture nice deep value trades.
Happy trading,
— Scott Welsh
