Hold Your Nose and Buy

This is the part we’ve been waiting for.

Last Friday I went live and walked through The “Recipe” for a Market Bottom. 

Not a prediction. A process.

One of the key ingredients?

Reversion from oversold.

Let’s be clear about something that gets butchered all the time.

Oversold is NOT bullish.

That’s lazy analysis.

What is bullish is the reversion from oversold, especially when it happens within an underlying uptrend.

The Hold Your Nose And Buy Signal 

In this case, we’re defining that uptrend simply, 50-day above the 200-day. 

Nothing fancy.

Now layer in breadth.

This is the S&P 500 percent of stocks above their 20-day moving average. 

When that gets washed out below 30%, you’ve got pressure. But pressure alone isn’t a signal.

The signal is when it reverses back above 30%.

That shift matters.

It tells you selling pressure is no longer expanding, and participation is starting to come back.

It’s not perfect, but it’s actionable.

You’re no longer guessing. You’re no longer catching a falling knife. 

You now have a reference point to define risk against.

That’s the difference.

So no, I’m not sitting here telling you this is the bottom.

I don’t know the future, if you do, please hit me up. 

What I do know is this exact setup, over decades of data, has produced solid forward returns over a 20 to 50 day period. 

Not every time. But enough times to matter.

That’s all I need.

Holding my nose a bit? Sure.

But this is where the risk/reward starts to tilt back in your favor.

Anyway, that’s my two cents.

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