Down Goes Frazier! Swing Trading and the Sell-Off
Contrary to popular belief, the classic line from the late great Howard Cosell (“Down goes Frazier!â€) was not uttered during one of Frazier’s classic contests with Muhammad Ali. Rather “Down Goes Frazier!†was Cosell’s refrain during another classic tilt between Smokin’ Joe Frazier — one with the then-unstoppable George Foreman.
Frazier was no match for Foreman, who dropped Frazier six times before the fight mercifully ended. To some observers, the outcome was no surprise. There is an old boxing maxim that says that a big strong slugger will beat a swarming type of fighter more often than not. According to this truism, the swarmer’s aggressiveness is all too easily neutralized by the slugger’s heavy hands. In other words, the swarmer dares the slugger to “bring itâ€, and when the slugger does, it is often lights out.
This is something I was thinking about as the market sell-off intensified on Monday. Like Frazier, this overbought market, this wildly overbought market, came barreling into Monday’s trading was met by a far bigger and stronger force: the slugging power of a year-long bear market. And when overbought stocks met bear market, the outcome tends to be very, well, down goes Frazier!
Fortunately, we’ve had a number of high Short Term PowerRating ETFs, inverse ETFs that allowed swing traders to either hedge their positions or even bet outright on falling markets. Either approach to the short or inverse ETFs funds we offered — and have been offering — over the past few days would have turned out well as of Monday’s close.
As I’ve said after some of the other instances in which timely trades in short or inverse funds have proved fruitful, be wary of overstaying your welcome. One of the worst mistakes swing traders can make it to turn their short term swing trades into intermediate term momentum trades. Be mindful of the edge we took advantage of in selling strength. Now that weakness has materialized, it’s time to ring the register and cover into that weakness.
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