Dip-Buying for Dummies
So many folks want you to believe that all you need to do is buy the dip and sell the rip and you'll make millions. Unfortunately, it just isn't that easy. If so, there would be very little to write about and everyone would trade for a living. Heck, we'd all be able to afford mansions -- yet we'd have to live in cardboard shacks since there would be nobody to build the mansions. It isn't that trend-chasing is any easier, but the issue with dip-buying is not just defining a dip, but also defining where the bottom of the dip is, or "should" be. I say "should" because if it isn't there, then that should be your stop point. Buying Monday's dip looked solid early this morning, but would anyone have defined that as a rip to be sold? I doubt it. And now that we've reversed lower, where is your "should" bottom? I would watch $134.43, the 13-day simple moving average on the SPDR S&P 500 (SPY); however, this is usually the time where I'll consult some of the volume profiling done by Bob Byrne, as well as my own charts. They are always worth a look.
Speaking of Bob Byrne, he and I, along with Bob Lang, will be hanging out in Austin, Texas, this Thursday night and perhaps Friday talking markets, sports, and the world in general. If you happen to be near the area and want to share a few thoughts, drinks, or jokes, feel free to drop any of us a note or meet up with us at Maudie's on Thursday evening a bit after 6 p.m....169 more words left in this article. To read them, just click below and try Real Money FREE for 14 days.
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