The top of stock market can be said to be the high point area of a market, and once the top is formed, it will be difficult for the stock price to break through again. When each round of the market runs to the top, it will also show some fixed characteristics. If investors can grasp these characteristics and sell stocks early according to the signal, they can avoid risk.
Generally speaking, the top of stock market has the following characteristics:
(1) Numbness to good news
Good news refers to news that has a positive effect on the rise of stock prices, such as annual reports that are better than expected, dividends or share placements, companies receiving large orders, and so on. Generally speaking, the stock price will have a wave of rise after the announcement of good news.
In the process of gradually rising stock prices, if the stock continues to release good news, then the stock price will continue to rise. Once the market’s response to the good news is getting weaker and weaker, and the good news can’t resist the selling, then it means that the market maker is using the good news to sell, and the short-term top of the stock market has been formed, and investors should mainly sell the stock.
(2) Time is approaching the limit
Due to the regularity of the time turning cycle, special attention should be paid to some dates that fall on the Fibonacci cycle line, such as 5 days, 8 days, 13 days, 21 days, 34 days, 55 days, etc. Every once in a while, investors consider the possibility of time turning.
(3) Hot spots and subject confusion
Hot stocks and subject stocks have a greater impetus for the broader market, especially some large-cap stocks, the impetus for the index is even more obvious. Like the large-cap stocks that start to rise, it also has a strong driving effect on the large-cap index.
Generally speaking, for a period of time, there will be continuous hot stocks and subject stocks in the market, which can ensure that the market can run positively. But once it reaches the top of stock market, there will be some situations: the market hotspots will switch quickly, and they may still be speculating in real estate stocks in the morning, but they may be speculating in hydropower stocks in the afternoon. This also shows that there is currently no clear hot spot in the market, and the hot spot is also difficult to sustain. And this often indicates that the market will peak in the short term, and investors should try to avoid it.