How to spot when the market hits a top
Printed From: The Equity Desk
Category: Market Strategies
Forum Name: Trading Psychology
Forum Discription: Discuss the psychological aspects of trading such as fear, greed and discipline. Why stocks are bought like perfumes and not groceries.
URL: http://www.theequitydesk.com/forum/forum_posts.asp?TID=2506
Printed Date: 07/May/2025 at 4:31pm
Topic: How to spot when the market hits a top
Posted By: Circuit
Subject: How to spot when the market hits a top
Date Posted: 08/Nov/2009 at 8:52am
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Replies:
Posted By: hit2710
Date Posted: 09/Nov/2009 at 7:45pm
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The current upmove has been sharp after almost 9 days of fall.
I was observing the volumes in nifty futures charts and except for 5/11 the volumes including those for today have not been encouraging. Smacks of short covering. I also tried to look at the volumes of pivotals like Reliance and L&T and found similar observations. On both these counters I find that the volumes have decreased on a day to day basis on nse and the prices have moved up. Most of the stocks and the index itself are quite close to the 61.8% retracements of their recent falls and next few days should indicate the direction of the markets. It needs to be seen whether nifty can clear the resistance zone of around 4930-4950. To me it looks like a distribution kind of pattern. I would like to know your views, Circuitji. ------------- Stockmarket is a weird place. For every person who buys a stock there is a person who sells it and both think they are very smart. |
Posted By: Eagle14
Date Posted: 27/Mar/2010 at 6:19pm
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Posted By: manish_okhade
Date Posted: 27/Mar/2010 at 9:51pm
| Enough money is lost in waiting for market to correct than in correction itself - Peter Lynch |
Posted By: vaib
Date Posted: 28/Mar/2010 at 9:50am
| As I noticed Indian market has quite followed US markets. And Dow has gone up from 10000 to 10800, so markets are quite inline with the US markets. Corrections if any should be small. Besides that I remember reading up US grwoth was 4-5% on QoQ and jobless ppl were lesser than the expected. So I feel ride is going to be there for a while. Nevertheless if fall happens then Indian markets would be in free fall :P. |
Posted By: shivkumar
Date Posted: 28/Mar/2010 at 10:58am
| read The Daily Reckoning. You will surely turn bearish on the US!!!! |
Posted By: abhishekbasu
Date Posted: 29/Mar/2010 at 12:31pm
I have been reading the Daily Reckoning for a number of years now. I would be very,very skeptical to take its views to formulate my opinion. Daily Reckoning is perpetually bearish (in the garb of being value investors--if you have time glance through their archives of over 10 years and you will see what I mean). Being bearish also has its constituents and its easy to say "See, I told you so, when markets fall". As behavioral economists suggests, loss is more painful to people than an equal amount of gain, people would tend to remember "soothsayers" who predicted the market fall. Closer home, you can see the same effect with Shankar Sharma's stardom when he "called" the market top. When the same person made a call that the market is going to 12000 when the sensex was at 14000 and it subsequently moved to 17500 (now), nobody seems to remember his call that went wrong!! ------------- |
Posted By: camanoj
Date Posted: 29/Mar/2010 at 12:47pm
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If daily reckoning always has same view (bearish i.e), I wonder why you have been reading it for so long!
If i don't get bread at a local store for a few times, I stop going there for bread. ------------- Manoj |
Posted By: abhishekbasu
Date Posted: 29/Mar/2010 at 1:09pm
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I read it since I read a lot of other stuff regularly as well :-) Also, it contains good articles and news updates on global economics that is sometimes easy to miss. And more importantly, it's free :-) The point I am trying to make is that these newsletters pander to a particular segment and it might not be a good idea to create your opinions by reading any one (or two) of them. You can very well use it for getting info.
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Posted By: arunshah2k
Date Posted: 01/Apr/2010 at 4:18pm
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Time to be cautious again. Sucker penny stocks have started to move again - Himachal futuristic, silverline and many other junk stocks are making moves in past couple of days.
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Posted By: camanoj
Date Posted: 01/Apr/2010 at 6:24pm
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Thanks. Well said. Hope to read gist of your learnings from these readings here someitmes.
------------- Manoj |
Posted By: manish_okhade
Date Posted: 01/Apr/2010 at 7:17pm
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Few indications in my opinion:
1) MFs starts advertising their 1yr, 3 yr, 5yr results.
2) Banks starts approaching you for investment plans
3) You see that job sector is stablizing and hike, promotions happening. All of sudden you approached by consultants and HR team looking in action.
4) One feels comfortable taking risks in the larket with cash which was
lying idel in the bank for past few years.
5) Your boss, freinds, relative is telling you his succeses in the stocks.
6) Price of brokerage stocks are approaching 52 week high
7) Leisure companies starts giving good qtrly results like TITAN, MAHINDRA
RESORTS etc.
If stock rise concides with many of above then one can safely say stocks are approaching dizziy heights :-)).
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Posted By: hit2710
Date Posted: 01/Apr/2010 at 7:46pm
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Good observations Manish. Another thing to add to manish's observation is
Raining of IPOs most of which are priced fancily and most of which give listing gains irrespective of valuation or business prospects. Yet another is what Lynch mentioned and which is most important. And that is when people who asked u what to buy start advising u what to buy. But once this phase begins it often lasts more than people expect and near the end of it, even the most pessimist people are convinced about the bullishness of markets. ------------- Stockmarket is a weird place. For every person who buys a stock there is a person who sells it and both think they are very smart. |
Posted By: vinvestor2010
Date Posted: 01/Apr/2010 at 9:49pm
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Posted By: tigershark
Date Posted: 01/Apr/2010 at 10:02pm
------------- understanding both the power of compound return and the difficulty getting it is the heart and soul of understanding a lot of things |
Posted By: manish_okhade
Date Posted: 01/Apr/2010 at 9:48am
If you ask me about the correction then i say that when and how much it would be i simply dont know. I can only say that its time to enjoy the outing, picnic and study the good stocks in free time :-)). Be ready when pessimism strikes to dig the gold with conviction.
Don't plan the investment in reference to SENSEX, Irrespective of mkt look for values all the time and remain invested unemotionaly. To earn the money one needs hard work and long term patience. Once RJ said that his success formula is simple "Anybody could be rich if invests for long time and has conviction in one's purchase". Conviction part is the bible, it only comes from strong homework only.
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Posted By: kulman
Date Posted: 03/Apr/2010 at 12:10pm
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Old article yet interesting... http://www.theequitydesk.com/forum/forum_posts.asp?TID=359&KW=mudar&PID=44494#44494 - - Mudar Patherya explains |
Posted By: manish_okhade
Date Posted: 03/Apr/2010 at 1:17pm
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Some more signs:
1) FD rates drops, CD issues also stops. RBI comes into action to to tighten the monetory norms.
2) New MNC banks come up in retail banking, you are chased for credit cards with lucrative offers.
3) IPOs are floated and they got oversubscribed crazily.
4) Small/Mid cap start taking Uchaals!
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Posted By: gaurav12123
Date Posted: 03/Apr/2010 at 8:46pm
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1} When Legard Starts Moving And Giving
Breakout. 2} Penny Stock R Top Traded Listed |
Posted By: arunshah2k
Date Posted: 03/Apr/2010 at 10:55pm
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One reads the following headline in front page of Economic Times: http://economictimes.indiatimes.com/Indian-equities-the-best-asset-class-for-FY-11-Survey/articleshow/5754811.cms - Indian equities, the best asset class for FY 11: Survey |
Posted By: sangita1
Date Posted: 08/Apr/2010 at 10:38am
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If you are paying attention in day trading you the very first thing to be acquainted with what exactly it is all about and to be aware of the nuts and bolts of day trading. In favor of starters, a person involved in day trading is very dynamic in the stock market and he makes numerous trades a day in an effort to formulate immediate gains by buying and selling stocks in a short duration of time. Not a soul-exacting day trading strategey will work every time, as the market is changeable day to day. To become one of the successful day traders, firstly you have to identify how the market works and get an experience for the market. For understanding the market firstly, you must be expertise to be acquainted with the stocks' basic trend, when to enter a trade, the long and short setups, and where to place stops. An additional significant fundamental is how to protect your profits and minimize losses. To become a day trader, it demands many of time and practice before you get used to the day after day volatility in the market. No one can become an expert day trader overnight. Here it does not matter how many books you have read or day traders you have watch that will not make you an immediate expert. If you want to become the day trader, then you must not be afraid of losing of money. If you lost money, do not worry, as some loss is to be expected. Always remember that with increased experience and sensitivity to the market, you will start turning a profit soon. If it happens to gather, a large profit then stops trading. Just don not stake it away by trying to gain even larger profits. You can always trade another day. Occasionally the market will not perform as you expected. As you come across with this situation, it is superlative that you do not trade at all. Once you grow added experience in day trading, you may be able to predict the direction of a stock price. One common mistake done by the beginner is that they pick top stocks or bottom stocks. In addition, try not to make this mistake. If you find difficulty in predicting the market moves then just wait and watch or you can always go home and trade again another day. To record all of your day trading results is a good idea to know that what works and what does not, and be more effective in trading. Scrutinize the policies of good traders. Look at how and when they sell or buy. Most of the time, good day traders often buy on bad news and sell on good news. Be trained to belief your intuition. Trysting entirely on analysis can mean letting a few good trades slip away from you. As you gain experience, you will learn to be flexible. You will see that different day trading strategies are required on different days and required on different stocks. It is wise to limit your stocks in manageable numbers. The key skill is patience. By means of patience and practice, you can be successful in day trading, and as your experience grows so do your profits. Everyday you can learn new day trading strategies in the market, which you can use to your advantage ------------- http://www.digimaxdental.co.uk - dental marketing http://www.wallstreetreporter.net/ - otcmarkets.com |
Posted By: shivkumar
Date Posted: 08/Apr/2010 at 10:41am
| Out at TED we are not the trading kind. We prefer to invest in good companies and watch our investment grow over the years. No short-term moves for us. |
Posted By: studentoflife
Date Posted: 10/Apr/2010 at 1:41am
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Let me try to put forth my idea of a bull market bubble using the tool of necessary and sufficient condition. Necessary condition: Stocks in general are trading at historically high P/E ratios.
Sufficient condition: All value traps and penny stocks are quoting at extremely high P/E ratios and unjustifiable evaluations.
Implication : Time to SELL.
For example last bull market the sufficient condition was :
Penny stocks:
Silverline Technologies was quoting at Rs: 17.
Facor Steels Ltd was quoting at Rs 12.
Value Traps:
First Leasing was quoting at Rs 108.
Confession:
I had all the above stocks..
 . |