My friend Andrew Thrasher has begun blogging and doing very high quality stuff on markets through the lens of a technical analyst. He’s got a post up today that everyone should check out, it identifies four key items to look for while the equity market traces out a bottom. Andrew cites Momentum Divergence, Sector Confirmation, Sentiment Prevalence and Volume.
Before going into each point, it’s important to note that predicting or calling a market bottom is not critical to a traders success, far from it. Sticking to your risk management principles and taking trades that fit your strategy are more important than being ‘that guy’ who called the tops and bottoms to the S&P or Nasdaq. The underlying purpose of measuring the health of an uptrend or downtrend (in this case) is to help get an idea of how much risk is built into the market for either direction.
Good caveat, now Go!
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