Skip to main content

The signal that the stock market has peaked?

the stock market

Although I know how to judge when the bear market is over and when I should buy at the bottom, I still don't know how to judge the selling at the top. I'm afraid I don't know when to leave the market after buying stocks in the future. If you have also tried to avoid the crash, stock market crash, and even bear market, or always hold stocks at these times.

These four tricks are based on my experience in the stock market for more than 10 years. They help me hold cash early before many market declines, so I suggest that you must see the end. It is likely to help you invest in stocks. 

Raise to another level. Because knowing how to go is more important than knowing how to buy, and knowing how to go is an important factor in determining how much you can earn or lose.

The first trick, everyone needs to learn to identify the Distribution Day. As the name implies, the shipping day is a day of huge selling pressure. On that day, it may be that large accounts are shipping. If the market goes up or down, it must pass through large accounts, that is, fund investors participate in buying or selling goods.

 Only then can the market form an upward trend or a downward trend, so when we read the charts of the broader market, we must understand the information that the chart reveals to us.

There are two conditions for how to identify the shipping date. I take February 24 as an example. The first condition of the shipping date is on a falling day, and its trading volume is higher than the previous day. The second condition is that the trading volume on that day is higher than the 50-day average trading volume. You will see that there is a red line on the trading volume. 

This red line is the 50-day average trading volume. Look back in February. On the 24th day, it is that both conditions are met, so the power of selling goods on this day is very huge, and retail investors in the market cannot do this kind of selling pressure, so this day is the shipment day. I would like to add one more thing about the shipping date. 

Sometimes the shipping day may not necessarily fall. If it rises on that day, the increase is very slight, or it would have risen a lot, but then the increase has narrowed sharply so that the whole day has hardly risen. At the same time, the trading volume is also larger than the previous day, even if it is higher than the 50-day average trading volume, that day can also be the shipping day.

Large households can still use that day to deliver goods. For example, on July 24, 2017, the increase on this day was very slight, but the volume was 471Million, which was higher than the average volume of 465Million in 50 days. The volume on this day is also higher than the 466Million of the previous day, so although the market has risen this day, it can also be a shipment day. Next is the key point. 

One or two days of shipping day often happens, but if there are 4 shipping days within 2-4 weeks, this is the warning signal issued by the market to you, you need to enter the alert state.

So here I repeat the first trick first. If there are 4 consecutive shipping days within 2-4 weeks, you need to enter the alert state immediately. The definition of the shipping day is that the day is a falling day or a slightly rising day. , But its volume is higher than the previous day, or even higher than the average volume of 50 days.

Next, I will talk about the second and third strokes, and then we will apply the 3 strokes together. The second move, pay attention to the sudden trend of the broader market. What is an abrupt trend? As the name implies, it is very sudden and weird. For example, there was a large volatility decline that day. 

If you know how to look at the candlestick (Kline), you will see a large black candlestick. Often these abrupt trends are around 3% or even high. Less than 3%. In a normal uptrend, you would not expect to see a large decline. When the market shows a large volatility decline, it means that a large number of funds fled the market that day.

This is also an unhealthy signal. To add a little more, the abrupt trend includes a gapping decline in addition to the fall of the black candlestick. Take February 24, 2020, as an example.

 If you zoom in a little, you will see this day. It was a gaping fall. Although the candle body is not long, it has left a big gap, and the volatility of this day is more than 3%, so the trend of gapping and falling is also considered a sudden trend. It shows that the market was very panicked at the time, and many investors couldn't wait to sell, they couldn't even wait, they didn't even ask the price to sell at the time of the market opening, so this kind of rift was caused.

Also, you can see that the trend throughout the day has been going down. In other words, at the opening of the market, a large number of investors fled the market without asking for money and goods, and no large investors were willing to panic. 

Under the circumstances, bargain-hunting will push the market up, but instead, you will see investors of all sizes, who are constantly selling and leaving the market throughout the day, so you will see that after the gap opening, the whole day is finally black Closing the market, which shows that the market has no purchasing power at all, is dominated by selling goods.

The third measure is the proportion of constituent stocks higher than 50 days in the index and the proportion of constituent stocks higher than 200 days in the index. There is a divergence signal from the broader market. First of all, what are the two indexes? 

This index is Measures how many index stocks in the market were above the 50-day/200-day moving average. Here is a percentage to show you. For example, if its degree is 47, it means that 47% of the index stocks are above the 50-day moving average. The following is a reading of the ratio above the 200-day moving average. For example, here it means that there were 67.86% of the index at that time. Constituent stocks are above the 200-day moving average.

Now let's go back to the third move, why are these two indicators so useful? The reason is that these two indicators can tell us more deeply whether the uptrend at that moment is a solid uptrend, that is, while the index is rising, are the index stocks also in a healthy uptrend? Or, when the index falls, whether the index stocks are still weak or have begun to strengthen so that we know more.

At that time, the most real situation of the index, because the index is composed of index constituent stocks, so when we judge the market conditions, we should judge the market's physical fitness according to the actual performance of the index constituent stocks, so the market index is just a Lagging indicator. 

If you interpret the broader market, you are not starting from the essence of the broader market, that is, the performance of individual index constituents. 

You will always catch the wind and always slow down the market a few beats because you use second-hand information that is not critical to interpreting the market. , And what does this secondary, non-critical secondary information include?

 Including news, current affairs information, market information, comment analysis, opinions, etc. from the Internet, newspapers, and major media. And the technical indicators commonly used by many people

For example, RSI, MACD, OBV, etc., basically do not use these traditional technical indicators such as MACD, Poly Channel, RSI.

I will only study in-depth, the actual price behavior, volume, and trend performance, because these are first-hand information rather than second-hand information, so let’s see how these two indicators are applied. I will use recent examples to explain, First from mid-January to mid-February 2020, the market continues to rise, but if you just look at it from the surface

You may still be buying goods at these locations, or you may hold an overly large part size, just like someone who is just sick. There may be no symptoms on the surface unless you help him to take a pulse or do a physical examination, you will know that his body has appeared abnormal.

So when you want to understand the real physique of the market, you need to look at these two indicators. We will now do a physical check for the market. I will draw a trend line here to show that the market is still rising, but please look at the composition Among the stocks, the proportion of constituent stocks above 50 moving averages. This ratio has been declining while the market has been rising. What information does it reveal?

Tell you that when the market is rising, more and more stocks have fallen below the 50-day moving average, which means that there are fewer and fewer stocks participating in the upward trend in the market. Let's look at the ratio above the 200-day moving average. 

At mid-month, about 80% of stocks were above the 200-day moving average, but by mid-February, only 70% of stocks were above the 200-day moving average. Don’t forget that at the time, the broader market continued to rise, and it was still at a new high. 

Why is it that in the index stocks, from 70% of stocks in January are above the 50-day moving average, to only 60% of stocks in February Why are there fewer and fewer stocks above the 50-day moving average and the 200-day moving average?

The reason is that smart funds are drained from the market. The uptrend you are seeing is not healthy. It may just be a blind eye for big players. 

They use a small number of funds to support some of the more weighted stocks or continue to push up some weighted stocks, while other larger amounts of funds are cashed out of other stocks, creating the illusion that the market is still singing and dancing. If you don’t see the essence of the broader market, it’s easy to see that the market is rising and then some stocks are falling. 

They feel that they have the opportunity to buy bargains because they see the market rising and feel that the market is still very safe. As a result, they are smart enough to think they have found something good. I don’t know that at this time they saw the so-called falling bargains, it was precise that large households were secretly shipping.

Comments

Popular posts from this blog

Will the Great Depression make a comeback?

the Great Depression On March 21, 2020, the United States already had initial unemployment data. Exceeding market expectations, the number of applicants reached 3.28 million, a record high. The current unemployment situation in the United States. Before March 7, employment in the United States was not affected by the epidemic. In the week of March 7, the number of people applying for unemployment benefits for the first time in the United States was 211,000, a decrease of 4,000 compared to the previous week. It is still healthy. This shows that the United States is in a good employment track range. The actual data began to fluctuate, that is, the data for the week of March 14, the number of people applying for relief reached 282,000, a slight increase. On March 21, the number of people applying for unemployment benefits soared to a record high this week. 1.7 million people have far exceeded expectations, and market expectations are about 1.5 to 1.7 million people. It can be said...

NIO stock forecast 2025: Core technologies

In terms of new forces in car manufacturing, industry participants have entered the fast lane in areas such as new product releases and intelligent driving. With the "general trend" of the popularization of electric vehicles, you will catch up. For NIO, which is the first to deploy the electric vehicle industry, whether ET7 can take the industry pioneer into the "overtaking lane" and continue to be at the forefront of the industry. Examining NIO's strategic measures is an effective way to try to find answers. Way, especially in the context of the “general trend” of electric vehicles.  NIO's Core technologies:  1. At present and for a period of time, the price, performance iteration, and supply of batteries and core raw materials will be the core factors that determine the popularization of pure electric vehicles, and determine a series of trends in the market and participants.  Lithium is an indispensable and important element of power batteries. The comme...

Safe-haven assets(GLD) are flowing into the market?

On March 9, 2020, the US Dow Jones Index plunged more than 2,000 points, the U.S. stock market crashed, the investment market was full of fear, and market funds flowed into those safe-haven assets? With the spread of the epidemic, the market's risk aversion has continued to increase, and the stock market has continued to fall. As an investor, to reduce investment risks, you must buy safe-haven assets, reduce the purchase or sale of assets in the stock market, and avoid a sharp decline in the stock market, which will cause serious losses. When market risks continue to increase, investors will continue to buy safe-haven assets. Investors should pay attention to the following several safe-haven assets and use them as safe-havens. Dow Jones Index The first safe-haven asset is gold. Gold(GLD), as a traditional anti-inflation commodity, has always been the preferred safe-haven asset for investors. GLD The second safe-haven asset is the Japanese yen. Because the Japanese y...

NFLX stock forecast 2025: plummeted 22% after the earnings report.

  Time to talk about Netflix, which plummeted 22% after the earnings report. First of all, Netflix's financial report this time does have its thunderous place, but part of the reason for the 22% drop in one breath is because the market sentiment has been very bad recently. At this time, the financial report thunderous will be punished more than usual. It is a wake-up call for companies that are about to report financial reports in the future, so we try to hold the stocks in the hands of companies with relatively stable historical financial reports and try to balance our positions as much as possible, to reduce the risk of financial report storms. After all, this quarter In a more dangerous period, back to the point. Let's take a look at Netflix's financial report this time. In the fourth quarter of 2021, Netflix's EPS was $1.33, exceeding analysts' estimates of $0.82, and revenue was just in line with expectations, with $7.71 billion, an increase of 16% year-on-year...

Will China's economy recover as the epidemic is under control?

During the Chinese Spring Festival, novel coronavirus broke out in Wuhan, and the Chinese stock market was hit hard. Subsequently, the Chinese government quickly took strict measures to block Wuhan, a city with a population of tens of thousands of people, to prevent the further spread of the epidemic, and to take corresponding epidemic prevention measures in other cities.  When the worst of the epidemic had already occurred, the Chinese stock market quickly rebounded. As the number of infections continues to decline, China's Shanghai Composite Index is expected to rise further. Sars Period Looking back on similar events in the past, the SARS epidemic in 2003, the stock market also made a short-term decline, and then the SARS epidemic was brought under control, the stock market immediately went up for a long time. According to past historical data, the impact of the novel coronavirus epidemic on the stock market may be short-lived. China Fund Capital Flow Howeve...

FNKO VS PLBY: Which NFT stock is more attractive for investment?

The market for NFT stocks is recently booming, and investors have begun to show strong interest in NFT stocks.  NFT is a digital asset created using blockchain encryption technology, such as works of art, music or video, etc. Each NFT has a unique digital signature to determine its unique attributes, making it difficult for NFTs to exchange with each other.  NFT provides a unique way for content creators to earn income by paying copyright fees or selling their artworks directly to consumers.  According to data provided by Forbes Advisor, since November 2017, nearly $174 million has been used for NFT transactions. On May 12, Eastern Time, eBay (EBAY.US) added NFT to its online shopping mall product list.  Funko (FNKO.US) and PLBY Group (PLBY.US) recently had the most popular NFT concept stocks, which stock is more attractive for investment?  Let's look at what Wall Street analysts think of these two stocks.  Funko is a pop culture consumer goods company who...

Bear market coming, gold(GLD) assets become essential

The economic data of the global economic powers have been deteriorating, entering the bear market stage of the economy, and people have become more cautious when choosing asset investment. We should choose investment products with a low correlation coefficient with economic performance and investment products suitable for the current economic cycle. Investors should pay more attention to foreign exchange and commodity markets so that they can add value to your assets. Among many assets, anti-inflation commodities such as gold have become essential assets. Take gold as an example. For many years, gold has been regarded as an anti-inflation commodity by international capital markets and has been regarded as an important asset hedging tool by investors. There is also a saying, "The world bought gold during turbulent times." From basic political theory, we know that gold is not currency, and the currency is naturally gold and silver. Although gold has withdrawn from ...

Palantir stock forecast 2025: What kind of company is PLTR?

 PLTR introduced today may be the most controversial company in the current market, not one of them.  As a stock, he is the faith stock of many retail investors. Those who believe in it generally believe that its stock price can double at least ten times in the future.  Catherine Wood, the president of the ARK Fund, nicknamed "the light of retail investors," continues to buy the stock, which is also highly sought after on the WSB forum; on the contrary, most analysts on Wall Street are not optimistic about its development.  The average target price at the end of 2021 is still 10% lower than the current stock price.  As a company, its revenue is growing steadily and rapidly, with an annual growth rate of about 30% per year. However, the company has never achieved profitability in the past 20 years since its establishment.  As a high-tech enterprise, the company is full of various genius ideas and the top talents in the industry, but they are mostly engaged i...

TSM Stock Forecast and Price Target 2021

Today, I will analyze TSMC stocks in-depth with you. In the semiconductor sector, TSMC has always been my most promising stock. TSMC has just announced its results for the fourth quarter of 2020. At the same time, there are new developments in the entire chip industry recently. Therefore, today I will combine the financial report and chips. The latest developments in the industry to analyze the trend of TSMC stocks, First of all, we analyze TSMC’s fourth-quarter and full-year 2020 financial reports to see what are the key points worthy of investors’ attention. First, TSMC’s fourth-quarter revenue and profitability are very good.  Compared with the outlook for Q4 in Q3, the outlook at that time was US$12.4-12.7 billion, and the actual revenue was US$12.68 billion. Actual revenue As the upper limit of the outlook, the gross profit margin outlook is 51.5%-53.5%, while the actual gross profit margin is 54%, which is better than the outlook. The operating net profit margin is expected t...