Identifying Trend Change

Introduction:

Market trend comprises of extend and duration. Which means how far did the market go in one direction and for how long? But even if a market go in one direction, sometimes severly, the overall trend does not change direction. This was surprisingly true on crash of 1998 and 2011.

Hypothesis:

Bear market starts when SPY closes below the open of the month (Red Months) for 3 or more months followed by SPY  not able to close above its monthly open(Green Months) for  3 or more months.

SetUp:

Go to www.tradingview.com –> Type SPY in box before Launch charts and click Launch Chart –> On the top left corner after SPY box, click on 1D and select 1M (for monthly).

Mark all 3 green and red months as in the chart below

 

Conclusion:

After every 3 Red months, if SPY fails to post 3 Green months in a row, we get the bear market.

This technique will help anyone to capture 70% move of every major market trend.

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