• Subscribe
  • Log In
  • Home
  • Daily Diary
  • Asset Class
    • U.S. Equity
    • Fixed Income
    • Global Equity
    • Commodities
    • Currencies
  • Sector
    • Basic Materials
    • Consumer Discretionary
    • Consumer Staples
    • Energy
    • Financial Services
    • Healthcare
    • Industrials
    • Real Estate
    • Technology
    • Telecom Services
    • Transportation
    • Utilities
  • Latest
    • Articles
    • Video
    • Columnist Conversations
    • Best Ideas
    • Stock of the Day
  • Street Notes
  • Authors
    • Bruce Kamich
    • Doug Kass
    • Jim "Rev Shark" DePorre
    • Helene Meisler
    • Jonathan Heller
    • - See All -
  • Options
  • RMPIA
  • Switch Product
    • Action Alerts PLUS
    • Quant Ratings
    • Real Money
    • Real Money Pro
    • Retirement
    • Stocks Under $10
    • TheStreet
    • Top Stocks
    • TheStreet Smarts
  1. Home
  2. / Markets

Here's My Approach to Trading This Market Right Now

An oversold bounce is no surprise, but how long will it last?
By JAMES "REV SHARK" DEPORRE
Sep 06, 2022 | 07:26 AM EDT

After a brutal week of selling, stocks are attempting an oversold bounce on Tuesday. Traders that were looking for some relief last week were trapped a couple of times in bounce attempts that failed.

On Friday, the market celebrated the August jobs report, which showed that the unemployment rate has risen, but there also was the creation of a substantial number of new jobs. It was hailed as a "Goldilocks report" by some pundits, but the action fizzled out at midday, and there was steady selling into the close.

This action left the S&P 500 with its lowest close since July 26, and there was notable technical damage as all of the indexes are now back under their 50-day simple moving averages. The rally that was celebrated in mid-August is now being viewed as just a very energetic bear market bounce and not a major low.

There is bounce action early on Tuesday as oil and energy stocks are running hot on the Russian shutdown of a natural gas pipeline and the potential for supply cuts in the Middle East. Oil has been under steady pressure in large part due to concerns that economic slowing will cut demand, but the supply problems are not going away, and the fall in demand may not be enough to solve the problem.

At this juncture, there isn't any good reason to trust an oversold bounce to last very long. The question, however, is whether it is tradable or not. Counter-trend moves can be sizable, but this market has a tremendous amount of overhead resistance right now, and sellers and shorts will be lined up to sell into strength at some point.

There isn't any major economic news coming this week, but the very important CPI report is due next Tuesday and will be a market mover. It will provide some clue as to whether the Fed's hawkishness is having an impact on inflation, although it is unlikely to be sufficient to cause a major pivot. Traders will be debating all week whether the Fed may start to relent a little if CPI softens, but the problem is that Fed Chair Powell and most Fed members have made it clear that rate hikes are coming even if there are some more friendly economic reports.

My approach to the market right now is to maintain very high levels of cash, look for some short-term trades, and be highly selective about any long-term buying. I see no reason to tie up capital in hopes that I might be catching a stock near its low. I prefer to buy long-term positions when I think they are ready for a sustained uptrend. Whether I buy the low or not is unimportant. I want to catch a positive trend.

The early bounce action is gaining further traction as I write, and we'll see if it causes a little FOMO to develop.

Get an email alert each time I write an article for Real Money. Click the "+Follow" next to my byline to this article.

At the time of publication, Rev Shark had no positions in any securities mentioned.

TAGS: Federal Reserve | Futures | Jobs | Markets | Stocks | Trading | U.S. Equity

More from Markets

I'm Making Small Bets With These 2 Stocks

Bret Jensen
Jan 27, 2023 11:30 AM EST

While I remain cautious on the overall market, I continue to act upon the limited opportunities I'm finding in the current market.

Adani Companies Plunge Under Hindenburg Attack, Hurting Secondary Sale Attempt

Alex Frew McMillan
Jan 27, 2023 9:30 AM EST

Retail investors may baulk now they are being offered Adani Enterprises shares at a range well above their current trading price.

Rising Above the Resistance

Guy Ortmann
Jan 27, 2023 9:11 AM EST

Five of the indexes rose above their respective near-term resistance levels. Here's what that means for the market.

As the Bears Battle the Bulls, the Market Action Remains Choppy

James "Rev Shark" DePorre
Jan 26, 2023 11:40 AM EST

GDP, unemployment claims, and durable goods reports were better than expected, creating hope that the Fed will be able to create a soft economic landing.

Should You Trade Tesla Now? Here's the Way to Do It

Stephen Guilfoyle
Jan 26, 2023 10:47 AM EST

Elon Musk says he's not worried about any damage done to the Tesla brand due to his activity on Twitter.

Real Money's message boards are strictly for the open exchange of investment ideas among registered users. Any discussions or subjects off that topic or that do not promote this goal will be removed at the discretion of the site's moderators. Abusive, insensitive or threatening comments will not be tolerated and will be deleted. Thank you for your cooperation. If you have questions, please contact us here.

Email

CANCEL
SUBMIT

Email sent

Thank you, your email to has been sent successfully.

DONE

Oops!

We're sorry. There was a problem trying to send your email to .
Please contact customer support to let us know.

DONE

Please Join or Log In to Email Our Authors.

Email Real Money's Wall Street Pros for further analysis and insight

Already a Subscriber? Login

Columnist Conversation

  • 11:48 AM EST REAL MONEY

    Watch Doug Kass on the Daily Rundown!

    In today's Action Alerts PLUS Daily Rundown, Doug ...
  • 11:03 AM EST JAMES "REV SHARK" DEPORRE

    This Weekend On Real Money

    It's time to start using this power to build great...
  • 03:06 PM EST BOB LANG

    LEAPS Webinar

    This week, I offered a free webinar session talkin...
  • See More

COLUMNIST TWEETS

  • A Twitter List by realmoney
About Privacy Terms of Use

© 1996-2023 TheStreet, Inc., 225 Liberty Street, 27th Floor, New York, NY 10281

Need Help? Contact Customer Service

Except as otherwise indicated, quotes are delayed. Quotes delayed at least 20 minutes for all exchanges. Market Data & Company fundamental data provided by FactSet. Earnings and ratings provided by Zacks. Mutual fund data provided by Valueline. ETF data provided by Lipper. Powered and implemented by FactSet Digital Solutions Group.

TheStreet Ratings updates stock ratings daily. However, if no rating change occurs, the data on this page does not update. The data does update after 90 days if no rating change occurs within that time period.

FactSet calculates the Market Cap for the basic symbol to include common shares only. Year-to-date mutual fund returns are calculated on a monthly basis by Value Line and posted mid-month.

Compare Brokers

Please Join or Log In to manage and receive alerts.

Follow Real Money's Wall Street Pros to receive real-time investing alerts

Already a Subscriber? Login