I am always intrigued as to the definitions of when a new bear market begins. Most pundits claim that when a market falls 20% then it is in the grip of the bear. I am not so sure. For example if you held a stock at $10 and it went to $8 would you consider that stock in a bear market or just accept the fact that it had gone down 20%. My thinking tends to guide me towards the latter position.
Having lived through the bear markets post the 1987 crash, the Asian economic crisis, the Tech wreck and the GFC simply going down 20% doesn’t really cut it for me.
What also intrigued me about the recent moves in the Nikkei was the somewhat odd thinking that a market that gained over 50% in just over 4 months was not going to end in tears.
I personally like the idea of using a simple switch to either be looking for bullish trades or bearish ones.
There are many examples of this around the traps but I feel that simple is best. For example, Dave Landry uses a 10, 20 & 30 Day moving average and trades in the direction of how they line up on the index. It’s not infallible but combined with his big blue arrow trend tool it keeps you out of trouble most of the time
What I find astounding is that humans, generally, complicate the ‘trading game’. Insofar as unrealistic expectations this takes the cake. What other investment strategy potentially offers a 30% gain over 4-5 months? The big picture is essential and so far as the game, Monday experts know everything. If in doubt seek real experience, real knowledge and real people in the form of the trading game mentor program.