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Stock Investing Strategy When at All Time Highs

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Now that the S&P has touched 2400, 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 over 12% in the S&P 500 alone. For those that 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 12%!?!?!?

Maybe you were too cautious because you don't feel you know enough about stocks. Or maybe you were too nervous about the uncertainty surrounding the recent election. Either way, it's important that you understand why you missed out, so you're not intimidated to make your move on the next big opportunity.

As we wrap up the first quarter of 2017, it is paramount to have a game plan. It's very likely that we will see a pullback with some consolidation, before ultimately moving higher into the end of the year. 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 be far greater than 12%.

Continued . . .


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Is the Market Rigged?

Computer-automated high-frequency traders (HFTs) are flat-out scaring investors into selling good stocks. Then, when prices dip, they swoop in to catch the bounceback. This can be immensely and consistently profitable. One HFT had only a single losing day out of several hundred.

Zacks has mounted a "Counterstrike" to catch the best of these unfairly pushed-down stocks, and you can get in on it now.

Immediate Attention Recommended: A special opportunity is only available until midnight Saturday, March 11.

See our Counterstrike Stocks right now >>

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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) Trump doesn't get it done -- Perhaps the biggest risk is if Trump's market promises (tax reform, deregulation, and infrastructure spending) don't materialize. The most important issue for the market is taxes. If tax reform ever gets labeled as "dead" then watch out, expect a sell off. Deregulation of the financial sector is another promise and an important catalyst for the financial stocks to head higher. If deregulation doesn't go far enough, financial stocks could lead the market lower. An infrastructure bill, because of the support from both parties, is likely to get passed. However, if it starts taking longer than anticipated, infrastructure stocks will sell off.

2) French elections -- In late April the French elections will pop up in mainstream media. One of the candidates, Marie Le Pen, wants to leave the European Union. If she is elected, expect a Brexit type of shock on the global markets.

3) Debt ceiling -- March 31st is a date to remember. While the debt ceiling always seems to be resolved before it's a real concern, the divisions in Washington could put a snag into the process. On the small chance this issue isn't resolved, the market will sell off and the VIX will spike on the uncertainty of the Treasury's ability to pay bills.

4) Interest rates and the economy -- Interest rates are rising and the effect on the economy will be seen after the fact. If the Fed decides to raise rates three or more times in 2017, we could see slowing in certain sectors like housing that could cause fear in the markets. An overreaction in the markets in response to a rate hike could lead to long-term opportunity for investors.


Sector Rotation

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

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

S&P 500 (SPY): 12%

Consumer Discretionary (XLY): 12%

Consumer Staples (XLP): 6%

Energy (XLE): 2%

Health Care (XLV): 12%

Industrials (XLI): 16%

Financials (XLF): 26%

Real ESTATE (XLRE): 6%

Technology (XLK): 14%

Utilities (XLU): 10%

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 have more risk than an ETF, but 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 what stocks should be bought and which ones should be ignored.

In addition, sell-offs tend to be manipulated by computer driven algorithm trading that can over exaggerate a move lower. By recognizing this abuse, an investor can squeeze a couple more percentage points out of a trade then a typical investor would.

Since early 2016 we have seen the earnings recession, the Brexit, and the election. Each time investors bought the dips, they have been rewarded handsomely. This should be a recurring theme in 2017.


How to Capitalize

You may not know how to find the right stocks when markets dip...but I do. It comes from spending 12 years as a professional trader and watching how markets move and react to news. The next three months might lead to some of the biggest market moves of 2017 (both down and up), so why not profit from them?

That is the mission of my portfolio, Zacks Counterstrike.

This service is designed to sniff out when the computers have manipulated a stock's price or made a short term mistake. We will take advantage by buying the worthiest of these stocks that have been unfairly beaten down.

Then when the stocks have moved our way, we will lock in gains and look for the next opportunity.

We're now holding 7 stocks and getting ready to trigger trades from my watch list at any moment. Our goal is to generate double-digit gains in 1-4 weeks.

So be sure to look into Counterstrike today. As an added incentive to take action now, you are invited to download a Zacks Special Report, Roadmap to Mega-Profits absolutely free. Deadline to download is Saturday, March 11.

This bonus offers you a nice balance to our short-term Counterstrike trades because it pinpoints an industry with explosive long-term growth potential. Did you miss Apple's 9X stock explosion since they launched their iPhone in 2007? Well, for the industry in our report, 2017 could be the same kind of pivotal year. And you'll see 8 stocks set to make the most of it.

See Our Counterstrike Trades and Free Mega-Profits Report Now >>

Wishing you great financial success,

Jeremy

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.