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

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...

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...

Bitcoin vs Ethereum vs Dogecoin: Which one is suitable to buy?

 Bitcoin(BTC), Ethereum(ETH), and Dogecoin(DOGE) are the three most-watched cryptocurrencies.  As a young investor, he has a strong mentality of pursuing returns and accepting new things. In recent years, cryptocurrencies have become the new favorites of many people. In particular, these three digital currencies have attracted the most attention: Bitcoin, Ethereum, and Dogecoin.  However, not all cryptocurrencies are created equally and trying to determine which type is right for you can cause confusion.  Each currency has advantages and disadvantages, and which currency you choose to invest in will depend on your situation.  Investing in cryptocurrency must bear the risk  First of all, you must consider whether cryptocurrencies are suitable for you because all cryptocurrencies are highly speculative and subject to great volatility. They have experienced the "currency disaster" in recent weeks, with an adjustable-rate of more than 30%.    Fur...

XPEV stock forecast 2025: can selling software make money?

The new energy vehicle industry has a relatively high degree of attention, that is, Xiaopeng(XPEV) released its first-quarter 2021 financial report.  The general performance data of XPEV are as follows:  The total delivery volume reached 13,340 units, a year-on-year increase of 487.4%.  Total revenue was USD 450 million, a year-on-year increase of 616.1%.  Auto sales revenue was US$429 million, an increase of 655.2% year-on-year.  The gross profit margin was 11.2%, compared with -4.8% and 7.4% in the same period last year and the fourth quarter of 2020, respectively.  The gross profit margin of automobile sales was 10.1%, compared with -5.3% and 6.8% in the same period last year and the fourth quarter of 2020.  To be honest, this data itself is not eye-catching in comparison with Weilai and ideals. Although for officials, this quarter’s financial report has ushered in two major milestones.  One is that gross profit margin continues to improve and ...

4 economic indicators that must be observed!

  Stocks are one of the simplest and most passive types of income, but when we invest in the stock market, we always feel that the current stock price is on the high side, but if we don’t enter the market to buy stocks, we are afraid that the stock price will continue to rise. When the U.S. stock market continues to hit new highs, should it enter the market or should it wait and see and wait for the crash to enter the market.  First of all, I want to declare that I am a value investor and insist on the BUY AND HOLD operation method. We all know that stocks are cyclical, and we are now experiencing the longest bull market in history. Stock market analysts believe that a crash may come at any time, but we just have no way to predict the specific time. I believe everyone understands. But I know that a bear market will definitely come. The long-term trend of stocks often has several economic data as a reference. Today we will take a look at these economic data. source: tradingview...

What is a spac stock in the Investment market?

Let me talk about SPAC first.  SPAC (Special Purpose Acquisition Company) means "Special Purpose Acquisition Company", also known as "Blank Check" or "Shell Company".  As the name suggests, this company has no actual business, and its essence is a financial innovation tool that provides companies with listing services.  More simply, SPAC is a shell resource company established by professional institutions such as investment banks and fund companies as promoters.  The sole purpose of this company's listing is to find the target company, through reverse mergers and acquisitions, to achieve the target company's listing and financing.  Most people pay attention to SPAC from 2020, but in fact, SPAC is nothing new.  The SPAC structure was first born in the 1990s and was pioneered by David Nabers, who worked for the Wall Street investment bank GKN.  However, in the past few decades, compared with traditional IPOs, the number of SPACs is very limited, and ...

Barrick Gold stock price soars after Warren Buffett's buys a stake?

Has Buffett bought gold ? Buffett has not changed. Buffett does not want to hold physical gold, but he has never said that he will not buy shares in gold mining companies. Looking at the entire market, there are not many stocks that fit Buffett's trading. And Barrick Gold Company is just one of them. Buffett bought nearly 21 million shares, and the current share value is $563 million. We now look at the underlying logic of Buffett's purchase of Barrick Gold stock. Compared with physical gold ETFs, gold mining companies can respond positively to market conditions. There are financial reports to analyze, With dividends and stock repurchase plans, gold mining companies have the right to reward shareholders through capital return plans. In contrast, the physical gold ETF has no gains. The market generally believes that it is still in the upward cycle of gold prices . The current international environment is one where black swans emerge one after another. While paying att...

TSMC VS Nvidia, AMD, Intel. How to choose semiconductor stocks?

The general pattern of the semiconductor industry, the overall trend and target price of TSMC in 2021, how the Nvidia(NVDA), AMD, and Intel(INTC) semiconductor stocks are laid out, what is the decisive factors, and whether there is a predictable time point, we conducted a more systematic discussion.  The big picture of the semiconductor industry The semiconductor industry is cyclical. Since the second half of 2019, global semiconductors have entered a new round of the business cycle. This is very important. Only when you understand this reason can you hold stocks with peace of mind. The following analysis is based on the time dimension. In the short term, looking at one to three months now, with the outbreak of the epidemic again, the production capacity of 8-inch wafers are in short supply, the semiconductor industry chain is out of stock, wafer foundry, packaging, and testing links have seen price increases, and production capacity is in short supply. High economic situation, In ...

Capital Flows Tracking Weekly

Release:  January 27, 2021 The weekly Capital Flows estimate the industry's total, based on the report covering more than 98% of mutual fund and ETF assets. Collect actual mutual fund net new cash flows and ETF net issuance together monthly; therefore, there is a discrepancy between these weekly estimates and monthly flows. The data from the previous few weeks reflect revisions due to data adjustments, reclassifications, and changes in the number of fund reports.  Mutual fund data represents the estimated value of net new cash flows, that is, new sales minus redemptions plus net exchanges, while exchange-traded fund (ETF) data represents net issuance, that is, net issuance minus total Redemption amount. This series does not include data on mutual funds that primarily invest in other mutual funds and ETFs that primarily invest in other ETFs.

AMZN stock forecast 2025: Amazon's main advantages

  On July 6, after the US stock market opened, Amazon broke through $3,600, a record high.  Amazon has been oscillating between 3000-3500 US dollars in the past year, and the stock price finally broke through.  Amazon is a stock that has a high valuation from PE but is seriously undervalued by the market from the perspective of its development prospects. It is one of my favorite technology stocks.  Amazon's main advantages are:  1. Amazon's current GMV is only half that of Alibaba.  Looking at the current penetration rate of e-commerce in China and the future penetration rate of e-commerce in the United States, we will find that Amazon e-commerce has huge growth potential in the United States.  Amazon e-commerce is far from saturated in the United States.  2. Cloud computing has unlimited potential.  As the industry leader, Amazon's cloud computing can maintain a growth rate of 20%-30% for many years in the future.  3. The international ...