As at 3.35pm, the scoreboard showed 30 gainers & 967 losers, with volume traded of 1.381 billion units. In U.S. days like this would most probably qualify as a 90/90 down day. What is a 90/90 down day? It is a day where 9 out of 10 stocks closed lower and 90% of the volume is to the downside. After a prolonged rally or bull run, a 90/90 down day is significant as it could signal a shift in the market psychology from one of accumulation to one of distribution.
In the past, I have seen many traders tried their hands in trading a 90/90 down day. They were rewarded with decent gain because a 90/90 down day could be followed by a technical rebound the next day or a few days later. However, the rebound is not widespread and whatever little gain you made would not provide sufficient buffer for the non-performers when the sell-down ensued. In the market, you have to be very good & very systematic to be able to sell and buy at the same time. Implementing conflicting actions simultaneously (buying & selling at the same time) is difficult to do. They are made more difficult during the pressure-cooker environment when the market is at a tipping point. For the laymen (read: most of us out there), you should just concentrate on doing the right thing. If you feel that the market is turning over, then your action should be to reduce your position. Try your best to get a good price for your stocks.
2 comments:
Thank you very much for your sharing. I think the single most important thing to do for investors is to manage the risk of their investments at this juncture.
Btw, I think you are one of the most trustworthy investment bloggers if not the most we've got in Malaysia. You have been providing very valuable guidance to retail investors like me. Tq.
Hi Alex:
As expected the bear came charging in 804 which also saw the dows dipped 513 pts in a single day? What a coincidence? Most have thought that the market has reached its pinnacle and the bull is sadly exiting on the onset of the impending bear....
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