Photo by Look Into My Eyes

It is safe to say that there is a lot of fear in the air. Palpable? Almost. What are we to do? Well, I am sure everyone has his or her own opinion as to the best strategy in such a situation. Maybe, I shouldn’t be so sure. So, what do I think? Well, I have been sharing my thoughts in this blog and what I now think is largely the same as before.

For a stock which is clearly in a downtrend, sell into strength at resistance. It might be a lower high but it is still a high. We don’t want to sell at a low. Then, wait patiently for it to form a base or to rebound and form a higher low. It would be safer to take up a long position then.

Not all stocks are in a downtrend. For stocks of businesses with strong fundamentals with their uptrends still intact, buying at supports is still the way to go. Look to the technicals for possible negative divergence as a warning sign. Certain stocks might be rangebound and if the businesses have strong fundamentals, buying at the support of the trading range is what I would do. Read more…