Rebound: Why it Pays to be Greedy when Others are Fearful


 
 
12:11 10/12/2018

Never ignore excessive fear. Instead, take full advantage of it, especially if it’s overdone.

That’s where value can often be found, as we noted on Thursday.

As Warren Buffett would advise, “Be fearful when others are greedy and greedy when others are fearful.” Or, as Sir John Templeton would advise, “Buy at the point of maximum pessimism.” Or even as Baron Rothschild would tell you, “Buy the blood in the streets, even if the blood is your own.”

That’s because fear often breeds opportunity.

And lo and behold, the Dow Jones is up 350+ points, as investors pounced on the fear.

With bond yield fears still there, the start of Q3 earnings is lifting markets today.

As noted by MarketWatch, “Third-quarter earnings will be a major driving as companies report over the coming weeks. According to FactSet, analysts are looking for earnings growth of about 19% and sales growth of 7%. While such growth points to an improving economy, there are also concerns that expectations have gotten too optimistic, or that the quarter could represent peak earnings, as much of the earnings growth can be credited to the tax bill passed late in 2017.”

In addition, higher rates really aren’t the end of the world.

In fact, they’re warranted when the economy is as strong as it has been.

The Market’s Biggest Drag – Amazon.com AMZN 



Amazon was nailed in the sell-off, falling from $2,003 to $1,700. While that drop was a drag on the NASDAQ, it’s beginning to recover from oversold conditions.

Each time AMZN becomes this oversold at its lower Bollinger Band (2,20), MACD and Williams’ %R, it bounces. In fact, take a look at the last two times when RSI fell to or near its 30-line with MACD pulling back to a historic low, coupled with Williams’ %R below 80.

The stock has bounced. It’s doing so again now base on the same pivot points.

From here, we expect AMZN to recover to $2,000, with a potential to test $2,500, near-term.


This article has been provided by a Chasing Markets contributor. All content submitted by this author represent their personal opinions, and should be considered as such for entertainment purpose only. All opinions expressed are those of the writer, and may not necessarily represent fact, opinions, or bias of Chasing Markets.
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