The Next Bull Run Won’t Wait for You to Recover
Fighting every correction and sideways market can leave you without the money or confidence to capitalize when conditions finally improve.
I’ve written extensively about distribution days, weakening leadership, and reducing exposure when trades stop working.
But knowing when to get back in is just as important.
William O’Neil’s follow-through day helps identify a potentially meaningful rally: a major index closing sharply higher on volume above the previous session, generally on day 4 or later. He emphasized decisive strength, with the strongest signals often appearing between days 4 and 7.
Follow-through days can fail. They are a reason to start looking for quality entries, not a reason to go all-in.
That’s where progressive exposure comes in.
Start small, define your risk, and build exposure as your trades work. When they fail, cut losses and scale back.
On the morning of April 8, I was discussing a potential follow-through day and sharing stocks preparing to break out. By April 22, MU was setting up beautifully. Several leaders went on powerful runs.
I didn’t know the rally would succeed. I was prepared to test it.
Then came June 5, when the Nasdaq fell more than 4%. I wrote in The Big Picture about the warning shot and a potential change in market character.
What followed was the Stage 3 sideways action shown on the chart, while many former leaders suffered much deeper declines.
I didn’t need to predict what came next. I needed to recognize that the favorable trading environment was deteriorating.
This is where traders get themselves into trouble.
They keep forcing trades through difficult conditions, draining both financial and mental capital. Then the next April 8 arrives, and they’re too beaten down to act.
After 20 years of trading, studying great traders, and making plenty of my own mistakes, this lesson keeps coming back:
You don’t need to make money in every market. You need to protect yourself during difficult periods so you’re prepared to capitalize when conditions improve.
When conditions deteriorate, I trade less. But I keep studying, building watchlists, and preparing.
I’m not married to being bullish or bearish. I’m willing to get defensive, and just as willing to start buying again when the evidence improves.
Protecting capital is only half the job. Being ready to put it back to work is the other half.
































