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How to Identify the Bottom of the Stock Market!

2 posters

Go down  Message [Page 1 of 1]

SLMarketWatch


Senior Equity Analytic
Senior Equity Analytic

The economic indicators offer little help since, historically; the economy does not begin to improve until about six to nine months after the\stock market has already turned up from its low.

Even some widely accepted technical indicators, such as 200-day moving averages or long-term trend lines, can sometimes take several months to identify a major turning point in the market.

To spot an important market bottom, requires a close examination of the forces of supply and demand – the buying and selling that takes place during the decline to the market low, as well as during the subsequent reversal point.

Thus, if an investor had a method for identifying and measuring panic selling, at least half the job of spotting major market bottoms would be there.

These two events – panic selling and panic buying ( or on rare occasions, two back- produce very powerful probabilities that a major trend reversal has begun.

One valuable tool is identifying the extremes of\ human psychology that occurs near major market bottoms. NO prudent investment program should be based solely on a single indicator. Other measurements of price, volume, breadth, and momentum are needed to monitor the strength of buying versus selling on a daily basis.

042608stayin.htm_ (stocks.about.com)

Do you want to know the exact date the stock market hits bottom and begins a true rebound during a bear market?

This is a magic date because stocks often post substantial gains coming out of a bear market and the biggest percentage increases happen early in the rebound.

The rebound usually doesn’t correspond with an upturn in the economy, but often precedes it. The market always looks forward so bad news today has already been factored into prices.

If you know when the market is hitting bottom, you can pick up some bargains before the upswing raises prices - the perfect “buy low” opportunity.

But what if you’re wrong?

Wrong Signals

The market is notorious for sending signals about false bottoms. If you jump at one of these false bottoms, you may soon see your value investment sinking further.

Even worse, the false bottom could be the first of many - each one a blip of hope before the market sinks further.

When the true rebound comes, it may be hard to identify.

It could be marked in the initial stages with bursts and retreats in prices.

So, how will you know the true rebound from the false start?
It’s actually fairly easy to spot - about three months after it happens.

Market Bottom

That’s when most observers will speak with confidence that the market bottomed and a true rebound began.
Of course, that information three months after the fact isn’t very useful, but it points up an important consideration.

Trying to time the bottom of the market is a guessing game a best - not a way to invest your money.

Your best strategy is to stay invested during downturns that way you can’t miss the bottom of the market and the subsequent gains on the upside.
It is difficult to watch the value of your portfolio drop in a down market, but study after study has shown that staying invested with a well-balanced portfolio is the best strategy.

DISCLAIMER

The above post is not meant to influence anyone\\\'s decision to buy/sell/hold/ rotate any stock or commodity.

Please do your home work before take any decision

DISCLAIMER

The above post is not meant to influence anyone\\\'s decision to buy/sell/hold/ rotate any stock or commodity.

Please go your home work before take any decision

Any hyper-links are not an endorsement & no responsibility is taken for their content. Please do your Home work.

cseguide

cseguide
Vice President - Equity Analytics
Vice President - Equity Analytics

Thanks for the timely post

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