Stocks never go up in a straight line.
They may run higher for weeks, months or even years. But at some point, sharp declines hit. It’s just inevitable.
Many investors fear these kinds of sudden swings. They get “weak hands” and sell at the first sign of volatility.
And when this happens to great companies, I like to call it a shakeout — because the market is simply trying to “shake out” those weak hands.
But while others panic-sell during dips, there are plenty of opportunities out there in the market. You just need to keep a level head…
Stay Strong and Hold on to Your Positions
You see, shakeouts occur in any market environment, for any reason.
For example, the markets were at all-time highs in February 2020. But when the COVID-19 pandemic hit, no one knew what to expect.
The markets tanked. It was the quickest 30% decline in history.
So many investors panicked and sold during that free-fall … only to be left sitting on the sidelines as the markets rallied back to new highs over the next six months.
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But those who stayed strong and held on to their positions saw great companies come roaring back. They even saw big profits for the year.
Now, this is just one shakeout on a large scale with a truly remarkable turnaround.
But plenty of shakeouts happen on a smaller level, too. When the markets shed even just a few percent, weak hands panic-sell and stronger-handed investors hang on for bigger profits down the road.
It happens over and over again.
Just the other week it happened in high-flying tech stocks. As big investors took profits, the tech sector saw a dip. And plenty of weak hands sold, giving us the chance to buy in at cheaper prices.
This time, we’re seeing a shakeout over fears of rising inflation. And once again, it’s giving us incredible opportunities to profit.
Here’s how you can take advantage of them today…
How to Profit in Both the Long Term and Short Term
Over the long term, you just need to keep holding on to quality companies. Don’t let your emotions give in to the swings and sell.
This happens all the time in my Quick Hit Profits research service. Our gains rarely go up in a straight line.
Earlier this year, I recommended trades on HP Inc. and Facebook. Both of them dipped by double digits early on.
But I told my readers to hold on, and both trades rebounded. We walked away with gains of 101% and 86%, respectively, in about two and a half months for our model portfolio.
Shakeouts also present great opportunities to make big gains in the short term, too. And I have a strategy to take advantage of them.
With my approach, you have the potential to make triple-digit returns from these shakeouts, sometimes in a matter of just weeks.
In fact, I saw an opportunity when the tech-focused Nasdaq 100 Index fell as much as 2% on both Monday and Tuesday last week.
So, I recommended two shakeout trades to my Quick Hit Profits readers. They’re putting us in a position for huge potential gains if the market rebounds like I believe it will over the next few weeks.
It’s right where I want to be. And I want you to be able to take advantage of these shakeout trades, too.
You can be positioned for whatever the market throws at you next — by learning how to follow my favorite trading strategy right here.
Chad Shoop, CMT
Editor, Quick Hit Profits