Into the breach, says James “Rev Shark” Deporre – it’s time for investors to start “looking hard” for favorable entry points in stocks they’ve been mulling over for six weeks now.
“The trading action has shifted, and sentiment has improved. That doesn't mean that stocks are going to go straight up from this point, but it does create the conditions where we can be more comfortable about putting cash to work,” Deporre wrote recently on Real Money.
Investors who, like Rev Shark, buy and sell stocks incrementally, are particularly well equipped to dive back into the market. That’s due to the extra cash most investors have in hand these days sitting out the market correction. The key is doing so smartly.
“I don't make single buys and sales of stocks,” Deporre said. “I build positions and then trade them opportunistically. The key to making this work is to have overall market conditions that are favorable, especially as we head into earnings season.”
Rev Shark said it’s “very likely” traders will see some market pullbacks, and that may lead investors to think the correction may go deeper. That’s probably not the case, as the stock market now has some support, and many stocks have much more constructive patterns.
“Consequently, I believe it’s time to start being a more aggressive buyer,” Deporre said. “That doesn't mean chasing strengths or new highs. It means building bigger positions as the price action develops.”