While staying out of bear markets is a good strategy, one should still keep their eye on the markets by running screens and keeping a watch list of stocks that may be bucking the downtrend in the general market. I maintain such a list then when the risk model switches back to a buy signal, I have stocks that are issuing buy points which can then be bought. These are often the stocks that well outperform the major averages during the next uptrend
The next bull market's big leaders and hence best investment opportunities show their first positive characteristics during a market correction or outright bear market. As the market goes through its paces, declining as much as 15-20% or more during a bear phase, future leading stocks are often building sound price/volume bases at the same time they are steadily showing improving fundamentals, such as improving and/or accelerating earnings and sales growth, improving profitability, and an increasing institutional following. Pivot buy points, favorable price/volume characteristics, are often early clues of potential future strength in potential leaders.
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