Momentum Monday – Lower Highs and Lower Lows

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The market correction continues in full force. Many momentum darlings are already down 20%, 30%, even 50% from their 52-week highs reached earlier this year. People often forget that momentum stocks are the best trading vehicles in both rising and falling markets. In a bull market, the typical momentum stock can deliver 10-20x the return that the S&P 500 does. In a corrective market, the same stock can easily underperform the general market by 4-5x. This is why every active trader should have a short strategy for weak markets. Every active investor should have an exit strategy to minimize drawdowns during corrections.

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