Market Update

A piece of advice from me - if you're tempted to buy a favorite stock right now, buy "small."

Yesterday's big intraday recovery was an encouraging sign to see. It's the kind of thing day-traders live for, certainly.

But for regular investors, keep in mind that many of the biggest one-day percentage-gain recovery rallies in stock market history happened during severe downtrends - not at the start of new uptrends.

So even though I'm leaning bullish, and think we're close to a tradeable bottom, it's no guarantee we're out of the woods yet.

The aftermath of Wednesday's announcement on interest rates, by the Federal Reserve, could serve as yet another knee-jerk inducement of more panic selling before we finally see a rally that can pull the market higher.

Consider the hypothetical chart below as one possibility that I've seen many times before - one that looks bad before it gets better:

That's why I say - if you're going to buy, buy "small"" - because during my early trading career, a lot of my biggest percentage portfolio losses came at times like now.

We're drawn like flies to honey when we see a bunch of depressed stocks - stocks we know and like - suddenly rocket 10% like yesterday.

But volatility works both ways.

So if you went out and bought your usual number of shares in a handful of stocks , thinking "this has got to be the bottom" - and those same stocks end up giving back all those gains and more - you could easily punch a big hole in your portfolio and sell at the absolute worst time - just before the real rally begins.

Just something to consider as we work our way through this difficult market period.

Best of goodBUYs,

Jeff Yastine