If I could sum up our current market in just one word…
It would be “ugh.”
We’ve had a rough September.
Inflation – up… grocery prices – up… interest rates – up… volatility through the roof…
Investors and traders are barely getting a chance to breathe.
Yet… people are still making money hand over fist – especially some of the Big Boys…
You know, the investment firms and hedge funds – they seem to be killing it.
But how?
What are they doing that is making them money – while so many people are losing their shirts?
Well… you’ll be surprised – as it’s probably NOT what you think.
Or…
Maybe it is what you think…
As trend following has been one of the best-performing strategies for hedge fund managers in 2022.
In fact, looking at the numbers, the SG Trend Index has climbed 29.6% so far…
While the S&P 500 has fallen 19%.
Which is why trend-following investors churned out such impressive returns – they’ve taken to jumping on trends by focusing on price signals, looking for momentum plays, and understanding that the Fed is going to do what the Fed does.
However, this strategy isn’t for the faint of heart…
Trend following, at its core, doesn’t look to predict what those trends are – but rather trying to jump on them as they’re happening – or, if they’re lucky, just as they’re forming.
That means they need to be able to identify major trades and shifts that have momentum – and capitalizing on them FAST – before the momentum dies out.
The trend-following strategy works by buying high and selling higher…
Most of these guys’ strategy uses the 100- and 200-day moving averages on the markets they follow…
Essentially, they leverage them to guide their entry and exit points.
The key is to follow the price of the asset and let the profits run.
But this isn’t the only method…
If an investor has more time and prefer to take a more active role in adjusting their positions – they can use shorter moving average periods, trend lines, or maybe a combination.
However, for a simple, less time-consuming approach, the 100-day and 200-day moving average crossover works just fine.
Believe it or not – this is all being made possible by the Federal Reserve…
As this year, the Fed has been driving trends in just about every market.
And when I say “every market” – I mean it – as that includes weakening stocks, rising bond yields, and the strengthening US dollar.
Since the global financial crisis in 2008-09 – central banks around the world, including the Fed, have lowered interest rates and kept them near zero and authorized massive bond-buying programs – in order to get the economy humming again.
But lately, inflation’s hit levels not seen in over 40 years…
So, the Fed’s been forced to change its strategy to bring inflation back down to their 2% target – even if it hurts the economy short term – as evidenced by its third straight 0.75% bump in interest rates.
But even that may not keep a recession at bay…
As interest rates and recession fears rise – many investors have moved toward the market’s more defensive sectors like healthcare, utilities, and commodities – as they’re more insulated from an economic downturn.
But… you might not want to go all-in on any one of these…
As a recession could send most stocks lower.
For now, it may just be best to enjoy the ride of the trend – make some money – and then wait out the coming storm.
That’s if your current strategy isn’t working…
GorillaTrades doesn’t have that problem.
We have own system for the current market – and involves doing what we’ve always done…
Let the data and numbers SHOW us which stocks have the ability to offer the best returns.
It’s this consistent and powerful strategy that has turned GorillaTrades into one of the most trusted stock services on the internet …
And we’d love to have you along for the next round of recommendations.
If so… AWESOME! If not… we understand – some people like to do all the heavy lifting themselves…
Either way, keep your eye on the trends – for some – they could be the best friend you have over the next coming months.
“Trends come like a series of ocean waves, bringing the high tide when things are good and, as conditions recede, the low tide appears. These trends come unexpectedly, unpredictably, and they have to be weathered with temperance, poise, and patience- good or bad.” – Jesse Lauriston Livermore
