Are you flexible?
I’m not asking if you can touch your toes or do a split.
I’m wondering if you’re flexible with your trading.
Many traders aren’t. They develop a bias and fall in love with it. It’s a nasty habit that can put you on the wrong side of huge moves.
Consider what happened recently…
Many traders became convinced that stocks were going to enter a bear market for the ages because of the global trade war.
That obviously didn’t happen. Instead, we got a face ripper to the upside.
The Invesco QQQ Trust (QQQ) has surged 28% off its early April lows. The S&P 500 (SPY) has spiked 21% over the same period.
This is what we call a V-bottom, folks.
On April 21, I told my Express Trader members this outcome was unlikely.
A week later, I changed my tone entirely. I told my subscribers that we needed to be open to all possibilities, including a V-bottom.
Why did I pull a 180? Simple: price action.
A lot changed between issues. International equities, including German and Spanish stocks, put in explosive V-bottoms. These stock markets are riskier than the United States. It boded well for risk appetite.
Market breadth also improved dramatically.
In fact, a Zweig Breadth Thrust (ZBT) triggered in the week between issues. This occurs when many stocks rally over a short period, typically 10 days. A successful one is an extremely powerful signal.
Since 1950, 16 other ZBTs have been triggered. Every time, the S&P 500 has been higher six months and 12 months later. The average one-year return following a ZBT has been 24%. This is an extremely bullish development that typically only occurs near major bottoms.
Market leaders were also acting phenomenally.
Netflix (NFLX) had broken out to new all-time highs. Palantir Technologies (PLTR) and many other leading names were also ripping higher.
In short, market internals flipped bullish in a big way, even if it wasn’t reflected in the indices yet.
Since then, the situation has only improved. Leaders are doing what they’re supposed to do, and more and more stocks are joining the party.
At this stage, it’s likely only a matter of time before the indices make new all-time highs.
In my Express Trader advisory, my PRO Meter just confirmed this bullish move and signaled we’re re-entering an environment conductive to swing trading.
That means we should see a lot of new setups forming in the market. If you’d like to know which stocks emerge as the strongest leaders—and get my top three trades at the start of each week—you can join us in Express Trader here.
Justin Spittler
Chief Trader, RiskHedge
