How to Find Trades in a Bear Market

Looking for opportunities to trade in a bear market can be a daunting task. When the market plunges, losers seem to outnumber gainers by a wide margin, causing panic and uncertainty. But fear not! Experienced traders know that there are always opportunities to be found, even in the most challenging  markets.

At Mometic, we've got you covered with our "trend agnostic" stock scanner that can detect continued weakness just as easily as uncover those "green shoots"  in a bear market. For those looking to go short, MOMO Pro highlights the bearish targets that are ripe for the picking. These are the stocks that are being sold down heavily and represent excellent opportunities for traders looking to make a profit.  (Note: Using MOMO Trend (MOMO Pro+) to identify support/resistance as well as for volatility adjusted entries or exits has shown very reliable here.)

But short selling isn't for everyone and many traders prefer to be long-biased or long-only. If that sounds like you, don't worry, as there are still plenty of opportunities to be found in a bear market. Obviously not all stocks rise and fall in tandem with the broad market, and there are always supply/demand characteristics and short-term drivers that are specific to each stock. You just need patience – something which not all of us have (looking at myself).  Realize this and limit your trades when going against market.

We've seen 3 or 4 breakouts a day for weeks now that can be scalped for sizable gains.  MOMO Stream, Unusual Volume (aka rVol), and ATR are a few of the tools for this.  Bundle this logic into our Conditional alerts if you want to be away from the screen to get push notifications on your criteria.

Here are just bullish breakouts from the past couple of weeks:

CDIO 530% , BVS 100%, MOB 60%, RETA 55%, OKYO 350%,  RKDA 70%, BLPH 44%, LION 34%, LUNR 250%, SLQT 200%

Shorting these pops has made the most sense for more experienced trades; but the market goes both ways and these  trades are brief as people have focused on scalps.  To short these review your broker's available short shares for the day, then use VWAP dist% and unusual volume (uVol) to hunt these plays.  Once several percent above VWAP on 1 hourly timeframe (give or take) start looking for an entry.  

In any case, it's even more important that you are making your own trades in this environment. The action is fast and hearing about opportunties on social media or chat means the play is already exposed.  And when in the trade - be happy with taking the "belly of the trade" – exit before the masses and walk away.

Remember that the indices do not represent the entire market, and not all stocks will move along with the indices or the broad market. There are strong stocks in a bear market, just as there are weak stocks in a bull market. With the help of market  stock scanners and screeners, like MOMO Pro, traders can identify strength and weakness across all market conditions and capitalize on them to make consistent profits.

Don't have MOMO Pro yet? Start here!

Team @ Mometic