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Stock Investing Strategy When at All Time Highs

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Now that the S&P has pulled back from 2800, investors are wondering how to maneuver their assets going forward. For those exposed to the market surge since the election, it has been rewarding, with returns around 30% in the S&P 500 alone. For those who overlooked the opportunity, there is now an urge to catch up with the rest of the pack. If you are in the latter camp I know what you’re thinking...

How did I miss out on 30%?!

Maybe you were too cautious because you didn't feel you knew enough about stocks. Maybe it was nervousness about the uncertainty surrounding the administration. Understanding yourself and the psychology behind why you missed out is important. But more important is NOT missing the next opportunity, and NOT being fearful to take the risk that comes with nailing that move.

As we wrap up the first quarter of 2018, it is paramount to have a game plan. It's very likely that we will see another pullback with some consolidation, before ultimately moving higher. Upcoming pullbacks will be caused by market events that will be fueled by anxious bears. This is the time to strike!

If investors know what sectors to buy and what stocks to focus on, the rewards can lead to double-digit percentage gains.

Continued . . .


Profit from High-Frequency Trading

Computer-driven High-Frequency Traders (HFT) manipulate the market thousands of times a day. They fire off massive amounts of short trades to drive stock prices down, then profit from the rebound. Their gains come at the expense of human investors.

Zacks Counterstrike portfolio allows you to turn these "manipulated price drops" into quick profit opportunities.

Access to these recommendations must be limited; the doors close to new investors on Sunday, February 25.

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Below I talk about upcoming market risks, sector rotation winners and why buying the next big dip will be rewarding.

Short-term market risks

1) Interest rates -- Perhaps the biggest fear is how much the Fed will raise interest rates this year. Will we see three or four rate hikes in 2018 and if it's the latter, how do markets respond? The recent market dip saw a violent move lower in equities and bonds as rates went higher.

2) Inflation -- As the economy strengthens, inflation starts to creep in. And the more that inflation creeps into the U.S. economy, the more the Fed will want to raise rates. This inflation issue makes risk #1 even bigger in the eyes of investors.

3) Trump doesn't get it done -- The hardest part for Trump is already done as the tax plan was passed. However, the market is still looking for infrastructure and more deregulation. If the political hurdles that Trump faces prevent an infrastructure bill from getting done, markets could see a sell off.

4) Volatility -- The VIX has been elevated over the last couple weeks, meaning markets are nervous about something. While some risks are obvious, others are sometimes not seen until they show their ugly faces. A high VIX signals there is something beneath the covers.

Sector Rotation

With the Trump victory, smart money had to reallocate their assets to areas that would benefit from a Trump presidency. This reallocation lead to violent sector rotation causing certain sectors to surge.

Let's go over some ETF stats since the election:

S&P 500 (SPY): 30%

Consumer Discretionary (XLY): 34%

Health Care (XLV): 26%

Industrials (XLI): 35%

Financials (XLF): 45%

Technology (XLK): 42%

Take note of these ETFs. The sectors that outperformed since the election will continue to perform through the Trump presidency. However, if the risks mentioned above come to light, these sectors will give investors opportunity at discount prices. Buying an ETF might be easy to do when this happens, but finding the right stocks to buy is much tougher.

Buying Stocks on a Dip

Buying stocks has more risk than buying an ETF, but can lead to greater reward. When markets sell off, we can utilize the Zacks Rank to separate the weaker stocks from the profitable ones. By combing the fundamentals of the Zacks Rank and technical analysis, investors can decipher which stocks to buy and which ones to ignore.

In addition, sell-offs tend to be manipulated by computer-driven algorithm trading that can over exaggerate a move lower. An investor who recognizes this abuse can squeeze a couple more percentage points out of a trade than an investor who doesn't.

Since early 2016 we have seen the earnings recession, the Brexit, the election and multiple Trump/Russia impeachment rumors. Each time that investors bought the dips they have been rewarded handsomely. This should be a recurring theme in 2018.

How to Capitalize

A major bounce was already seen in February and the next three months might lead to some of the biggest market moves of 2018, so why not profit from them?

That is the mission of my portfolio, Zacks Counterstrike.

Counterstrike is designed to sniff out when High-Frequency Traders have manipulated a stock's price. We take advantage by buying the best of these unfairly beaten-down stocks. Then when price moves our way, we lock in gains and look for the next opportunity.

We're now holding 8 stocks and getting ready to trigger trades from my watch list at any moment. Our goal is to generate quick and consistent double-digit gains.

Get in today and as an added bonus you may download our just-released Special Report, 5 Stocks Set to Double. It spotlights 5 companies Zacks experts predict could grow +100% or more over the next year.

To maximize the profit potential of our recommendations, we must limit the number of members who have access to the Counterstrike portfolio and Special Report. This opportunity ends on Sunday, February 25.

See Counterstrike and 5 Stocks Set to Double Now >>

Wishing you great financial success,


Jeremy Mullin has been a professional trader for more than 12 years with specific expertise in profiting from patterns set by High-Frequency Traders. He is the editor of Zacks Counterstrike portfolio recommendation service.

Normally $25 each - click below to receive one report FREE:

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