How to Buy Weakness In An Uptrend

Higher Highs & Higher Lows:

In the simplest sense, the definition of a bull market is a series of higher highs and higher lows. In addition to buying strength (only buying breakouts) is to step up and buy weakness in strong uptrends. This is one tool in my toolbox that helps me successfully navigate capital markets. It is important to keep in mind that eventually all bull markets end but until they do- buying weakness in uptrends can offer the astute trader tremendous risk/adjusted returns over the long term.

Instead of randomly picking bottoms, I prefer to listen to the market, let patterns emerge, and begin buying (and average up) as the market bounces off a near term low. Will I buy the exact bottom? No. But that is not my goal. My goal is to capture the bulk of the move, not pick an exact top or bottom. Why? because over time, I know that I can consistently capture large moves in the market without having to pick the exact top or bottom. Additionally, I have yet to find someone who can consistently and accurately, pick exact tops or bottoms of every move. From my pov, the more evidence that emerges that supports the logic that a near term low has just developed, the better.

Here are the past 5 pull backs in the S&P 500 and what I’m seeing in real-time. If Friday’s lows are breached, we are likely headed lower. If not, well… I’ll let the chart do the talking