The Bull Market is Over - What's Next?

Curiosity  Trading Opportunity

Live markets can only be understood backwards, but it must be lived (traded) forwards

Guest Post by Deepak Singh

Plain Vanilla Bull market is over...and now everyone is concerned - What next?

To exploit this curiosity - There is a new Television program on CNBC called HUNT for the Bottom. The best minds on market are going to share their opinion and help Indian public at large on what should they do - Get scared by Shankar Sharma or Get overly bullish by Sameer Arora or Get confused. Now, first thing first - the rationale behind that program is not to discover - where is the bottom? Because nobody knows where the bottom is. The objective - Generate huge viewership interest because there is a natural human tendency to look for relief in times of uncertainty.

But does this all matter. After few years of trading and making and losing money - Here are my learnings -

You cannot predict the market - The financial markets are generally unpredictable. So that one has to have different scenarios...The idea that you can actually predict what's going to happen contradicts my way of looking at the market...George Soros.

You have no control on market. So, why think what the market is going to do. It is much better to think what you are going to do if market behaves in a particular fashion. Trading and Investing is not a game of conviction. It is a game of scenario planning and executing trades and investment once a particular scenario plays out as one anticipates.

There is always bull market somewhere - The best way to identify bull market is to track money flow. Hence, always keep track of stocks that make a new 3 month high or 6 month high or 52 week high to identify areas of strength.

Be ready for surprise - The market makes the strongest move in direction of surprise. Hence, if majority of people are bullish - the sell off can be brutal; as it takes time for people to adjust to new reality. And similarly, it can happen in reverse direction also.

Prefer Discipline over Conviction - Market has its own view. The key to trading is not to argue with it, but try to take advantage of the move that it makes. One should always have an open mindset on the market and should always keep asking the question - How can I make money by taking acceptable risk?

I think - A Hunt for bottom is more of an academic exercise and not something one should be really concerned about. There are always reasons to be pessimistic and optimistic; and generally most of them are good one. For me, a successful trade makes me optimistic and a bad trade makes me pessimistic. At the end of day, that's what counts - not bottom or top.

Happy Trading

Cheers

Deepak Singh

Market Analyst, State of the Market

YAHOO IM - stateofthemarket

All Charts have been published with permission from www.chartalert.com

Disclaimer - The trading notes is Deepak's perspective on the market. The stocks listed here have been selected based on recent performance, and have probability of success in near term. But remember, it's still a probability, and chances are that stock may still not perform as expected. The column is purely for educational purpose. Please use your own discretion in trading. Trading Futures and options involves significant risk. You must consult your own financial advisor before trading to determine if it is suitable for you. Nothing contained herein is a solicitation to trade or a recommendation of a specific trade. By reading this publication you agree to make no trade relying in whole or in part on the comments of the writers.