Yesterday, Trump appointed Fed Governor Stephen Miran gave a speech where he said the Fed needed to cut rates deeper and faster.
While the other governors don’t agree with him for now…
There is definitely a chance we may see more than two rate cuts for the year.
That would just add to the momentum of this bull market.
And as today’s chart shows, this momentum can persist far longer than most expect.
Chart of the Day
This chart shows how the S&P 500 has performed each time the index has experienced a sharp momentum “rebound”.
In this case, the rebound is defined as the S&P 500 falling by at least 10% below its 200-day moving average and then bouncing back to at least 3% above it.
We’ve seen this V-shaped momentum rebound happen quite a few times dating back to the 50s. Here they are below:
As you can see, in most of these cases the market gained a median of 52% with the momentum cycle lasting 33 months.
Keep in mind that, as defined here, that 52% median gain is calculated beginning from when the S&P 500 has rebounded at least 3% above its 200-day moving average…
NOT at the cycle bottom.
If you look at the bottom of the table above, you can see this signal triggered on May 16 this year, more than a month after I called the April lows.
The S&P 500 was already up by over 20% from the lows by then.
In other words, the historical data shows that this bullish momentum could persist for A LOT longer.
As I said, I don’t expect a market crash this year or the next – despite how high valuations are.
The truth is, momentum is a far more powerful factor than valuations.
And those who miss participating in this bullish momentum regime out of fear of overvaluations will likely regret it.
But – there’s also a critical mistake traders make when participating in these bullish momentum regimes.
I elaborate below.
P.S. Later this evening, I’m releasing my next edition of 2 Trades in 2 Minutes. If you want priority access, get on the SMS list by texting the word “trade” to 87858 and you’ll get them the second they’re released.
Insight of the Day
The biggest mistake traders make when participating in bullish momentum regimes is chasing stocks.
Now look, I’m not one of those traders who absolutely refuses to buy stocks at new highs.
In fact, many stocks are good buys at all-time highs – as long as the strategy supports it.
But the fact is, when bullish momentum abounds…
There are way too many traders who chase stocks and buy them simply because they’ve hit new highs.
That’s a recipe for drastically underperforming the market.
It might work for a few trades simply because of the bullish momentum environment.
But that’s a trap, because it lures you to keep doing the same thing, which will inevitably lead to underperformance.
If you want to outperform the market – even in a bullish momentum environment – you have to be much more selective.
And that’s why tomorrow, Wednesday September 24, at 3 p.m. Eastern…
I’m going LIVE to show you how to follow a select group of traders into the highest-potential stocks out there.
This strategy works regardless of market momentum…
But it works even better when bullish momentum is dominant – like it is now.
One recent pick is already up over 50% – and that could be just the start.
I’ll show you everything you need to execute this strategy all by yourself in my free live demo tomorrow.
So click here to save your seat…
And I’ll see you LIVE Wednesday afternoon at 3 p.m. ET.
P.S. If you’re planning to attend on a mobile device, make sure you download the presentation app now so you don’t miss anything when it starts. See you there.
iOS: https://apps.apple.com/us/app/goto/id1465614785
Android: https://play.google.com/store/search?q=goto&c=apps
Customer Story of the Day
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Editor, Stock Surge Daily
