Are We About to Enter a Full Bear Market??

As of late there have been many posts pushing the volatility of the market and scaring investors out of their positions. The real question is, should investors be in fear of giant losses? In my opinion there is not a single thing to worry about in the current market. If you understand how the markets work and the relationship between each of them, you can easily take advantage of a potential upcoming bear market.

We have been seeing a shift in momentum lately in the financial markets without a doubt. Penny stocks are slow due to several factors, one major contributor being blue chip stock earnings reports. To new traders this seems like a good time to relax or maybe take a vacation. I can assure you this is not the case. Often times in a bear market you can find great opportunities to get companies at much lower prices while they retain their original intrinsic value. If a company is well known enough that everyone and their daughter can draw the company logo you may think about picking some shares up when it drops 30% in January due to profit taking and panic sells. In other words DO buy the dip. It's one of the easiest and most effective ways to double up on a position or to average down from a position that you may have taken a little prematurely. Another way to prevent heavy losses during your day trading journeys is to combine trading strategies. For example, you already enjoy and have experience playing low float stocks but you notice your plays aren't producing like they used to. You might be better off combining swing trading with your low floats or waiting until positive news brings healthy volume into the stock before pulling the trigger. Also you should not try to catch a falling knife. It may be tempting to buy a stock at $20 when it used to be $50 but if you wait until it breaks the downward trend you have a much higher chance of catching the bounce as close to the bottom as you can while also avoiding an immediate loss if the stock continues to spiral off downward.

You may be a penny stock trader but that doesn't exempt you from learning other markets. In fact it will only aid in making you more profitable. As proof I would like to point out how inverse ETF's can act as a fail safe in a bear market. Today we watched $TVIX and several other inverse ETF's bring in huge volume as futures fell off. Between 10:40am and 3:10 EST today $TVIX alone rode all the way from $7.50 up to $14.50. A change of over $7 a share not including any other inverse ETF's such as $SDOW that were trade-able!! Let's not forget about going short on stocks either. So to sum this up, will there be a bear market coming in? If not today then certainly tomorrow. It won't continue to rise forever but that doesn't mean we can't make money. :)