The term "prediction" can evoke a lot of hocus pocus with images of crystal balls, tarot cards, and wizards, but when it comes to predicting the stock market, it has nothing to do with the fantastic and mystical, and it is the science of quantifying herd behavior in financial markets.
This behavior is easily seen when looking at stocks like Apple Computer explode up to a substantial volume of such reports record growth in sales of products such as their iPods and iPhone each quarter. But did you also notice what happened to the shares immediately after October 2007, when the broader market began to decline? Shares fell from almost $ 200 a precipice, nearly half of its value in just two months!
What happened, did an amazing Apple product does not deliver all of a sudden, consumers are abandoning these products in favor of some other devices to the new fad? Not at all! What happened to them is what happens to the best companies in a bear market, they were sold, plain and simple. This is a herd effect, "get me now!" mentalities.
But it was not just AAPL. It happened to GOOG too, and RIMM, HP, GE, AA, and about 90% of all stocks across the board, with many seeing their price was halved in just a few short months!
This is an extreme financial breeding, but it is entirely predicted several indicators like to watch - like $ NYHILO - which measures the number of new highs against the number of new lows being created. It is the ratio of the peak in July 2007 and was overturning a few months ago precipitous decline that has taken place by year's end.
But what I find even more significant is the fact that there are other regular market movements which are also attributed to the same breeding behavior, but these appear on a more regular basis, less dramatic, and still is very tradeable basis.
Did you know, for example, every 7-10 days, Dow Jones and NASDAQ indices oscillate up and then down, providing some amazing swing trade opportunities for those who are willing to follow him? This movement occurs in both bull and bear markets, but most investors probably never even noticed it. It's a shame, because the high volatility we had in our market, each swing is a very lucrative opportunity for those who know how to play.
For example, over 30% of the market recovery we've had from 6 March 2009, there were several points along the way where you could have used that knowledge of these small counter-trend swings, add to existing positions or to start buy into this bull trend.
buy after big up trend started in one of the toughest things investors must contend. They do not want to hunt on the move, but I do not want to stay on the sidelines and miss it. These regular 7-10 dips are ideal for entry and continued to avoid chasing stocks.
Ten days after the sixth March low, for example, there is a buying opportunity when the short-term low re-formed 20th March (only 10 trading days after ).
Seven days later, the market plunged again on 3 / 30, once again offering the opportunity to re-enter or add to long positions after the second 8% increase in the days before. Again, seven days later, on 4 / 7, the second dip. On 4 / 20, you guessed it, the markets plunged again. Each dip is predictable and recognizable to those who have been taught to look for it.
can be used long-term trend to determine whether to play or through the top, which happens every 7-10 days, and use it as an entrance or exit point. For example, in the medium term bull market (which is 10 days moving average rises) I'll use those short-term dips to buy. Alternatively, I'll use a short-term peaks that occur in the medium term trend series (with 10 days moving average decreases) to sell short.
We had a short sale on top of 1 / 28, the second at 2 / 6, flat consolidation day on 2 / 18, the second consolidation on 2 / 25, and the market is low at 2 / 6 Each of these occurred in regular cycles of 7-10 days.
This is a very powerful way to trade, and if you look at the charts we post on our site to follow that 10 days of the cycle, it is easy to see when it is 7-10 days cycle the top or through the formation. In the current bullish rise, use the bed for purchase. But an average of 10 days begins to drop, use 7-10 tops for sale.
technique I described above, can help you get back what you might have lost the last bear market decline, and more importantly, do not end up losing it again.
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