Four Healthcare Recovery Plays

One of the most important things you can learn as a trader is knowing when to attack and when to bide your time.

That’s what today’s Closing Bell is focused on.

Trading markets will push every emotional button you knew you had, as well as a few you weren’t aware of.

Prior to entering a position, we are all fairly rational beings. But when your money is on the line, and prices are flying all over the place, our objectivity goes out the window.

Trading plans ensure you do things in the heat of battle that will protect your interests.

But there are other aspects of trading that you can’t plan for.

What are you supposed to do when the market goes nowhere for an extended period?

As time passes, the pressure builds. Your strike rate (percentage of trades that are winners) naturally declines as stocks drift or change direction without warning.

Making money isn’t just difficult; it is almost impossible during those periods.

But our desire for action will often trump our cautiousness.

Soon we are entering mediocre trades and regretting it later.

Doing nothing, and/or having no position, is a position.

It is a surprisingly powerful position if markets have an extended period of going nowhere fast.

That’s because you will remain clear-headed and objective while other traders deal with positions under pressure.

If a capitulation event unfolds, you are there, ready to pick up stocks for pennies on the dollar.

Having a method to know when the market is trending higher, undecided, or trending lower is important.

Think of it like traffic lights giving you a red, amber, or green signal.

In today’s Closing Bell, I will show you a simple method I use to gauge the market’s state.

It says the S&P/ASX 200 [ASX:XJO] has been in an indecisive ‘amber’ state since late last year.

The longer we remain in no man’s land, the harder it is to have high conviction one way or the other.

The long-term trend remains up, so there is nothing wrong with remaining invested.

But there is little easy money out there at the moment.

Rather than fighting the situation, we just have to accept it and focus on capital preservation.

There are still opportunities on offer, but they are becoming scarcer. It is a stock picker’s market.

The situation will change soon enough. Either we see a capitulation event that sets up conditions for the next rally, or buying kicks momentum into gear, and the traffic light turns green.

There’s no need to make sweeping statements about what the future holds. All we need to do is trust the traffic light system and wait for the market to tell us when it’s time to act.

Charlie and I also take a look at the bounce in healthcare stocks now that tax-loss selling is out of the way and give you four stocks to consider.

Closing Bell