I love buying unloved assets.
That doesn’t make me popular at cocktail parties – where everyone wants to hear flattery over their hot stocks. But, it does make me popular with my bank. So, I’m always on the lookout for unloved stocks and other assets that are entering bullish trends.
Think about the bullish position I pointed out on bitcoin back in February. Back then, the “King of Cryptos” was trading for less than $3,600 per coin. Last week, bitcoin traded above $12,000. Granted, I took profits on the trade when bitcoin hit my original price target of $6,000 back in May.
So, I left a lot of money on the table. Still, though, a 67% profit in three months is a respectable gain.
And, I see a lot of similar trades setting up in the stock market right now.
Admittedly, I am growing increasingly bearish on the broad stock market. The S&P 500 looks to me like it’s forming an important intermediate-term top. It seems to me we’re in for a rough period once this current rally runs its course.
But, even in a falling stock market there are going to be some stocks that rally. Oftentimes, those are the previously unloved stocks that nobody wanted. They trade at relatively cheap valuations. And, they have technical patterns that have built up a lot of energy and look set to explode higher.
Think about bitcoin back in February. Almost nobody liked it. But, the chart was forming one of my all-time favorite patterns. And that was my main reason for recommending the trade.
Here’s the chart…
The blue arrow on the chart points to about when we bought into bitcoin. The arrows line up with the short-term moving averages (9-day exponential moving average (EMA) and 20-day EMA) crossing over the intermediate-term moving average (50-day moving average (MA)). This sort of “bullish cross” following a long-term decline often provides the first clue that an unloved asset is entering a new bullish phase.
And, in this case, it worked out quite well.
Of course, in hindsight, this was an easy trade. Bitcoin was unloved. The chart had been stuck in a low-level consolidation phase for three months. The various moving averages were coiling together, creating lots of energy for the next move. And, the “bullish cross” told us it was time to buy.
This is the type of pattern I’ll be focusing on for new trades over the next several weeks. Even if the broad stock market enters a rough period, stocks with this sort of pattern offer a lower risk way to make big gains.
Best regards and good trading,
Jeff Clark
P.S. As you folks already know, I’m growing increasingly bearish on the stock market. And I’ve been very clear with readers that I see something ominous on the horizon…
I see a market crash coming. Investors could lose it all. But, like I said above, traders… especially traders who use my strategy… could make a fortune in the days and months leading up to it.
That’s why I’ve put together a brief presentation for you. And it’s not something you’ll read about in the mainstream media… To find out how you could profit off of the next market crash, read on here.
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