The anatomy of a bear market
As a rule of thumb, many traders believe that a bear market is a market that goes down 20% or more. But there is, of course, no official rule, but a bear market is regarded as both more extended and steeper than a correction. However, as a trader, the most important thing is that volatility picks up. Perhaps ironically, long strategies tend to perform better in a falling than in a rising market. Even better, short plans suddenly start working when volatility picks up.
The chart shows the “double top” on the first of September 2000 and the “triple bottom” on the 12th of March 2003, which marks the bottom of the bear market.
As you can see, there are several capitalization moments before the bottom of the bear market is achieved.
Take into consideration that 100% of the bear markets had a capitalization before ending!
Today, we have an S&P above 4000 points, there was some excitement about the break out of the moving average of 200 and the upper part of the bear channel. Nevertheless, the break out is not confirmed for me until it achieves and maintains the 4300 points.
This could perfectly be a Bull Trap trying to catch greedy investors.
Be careful with today's S&P performance and good luck with your investments.
As a rule of thumb, many traders believe that a bear market is a market that goes down 20% or more. But there is, of course, no official rule, but a bear market is regarded as both more extended and steeper than a correction. However, as a trader, the most important thing is that volatility picks up. Perhaps ironically, long strategies tend to perform better in a falling than in a rising market. Even better, short plans suddenly start working when volatility picks up.
The chart shows the “double top” on the first of September 2000 and the “triple bottom” on the 12th of March 2003, which marks the bottom of the bear market.
As you can see, there are several capitalization moments before the bottom of the bear market is achieved.
Take into consideration that 100% of the bear markets had a capitalization before ending!
Today, we have an S&P above 4000 points, there was some excitement about the break out of the moving average of 200 and the upper part of the bear channel. Nevertheless, the break out is not confirmed for me until it achieves and maintains the 4300 points.
This could perfectly be a Bull Trap trying to catch greedy investors.
Be careful with today's S&P performance and good luck with your investments.
