Timing The Stock Market

Reversals occur when the market wants a ‘break’ from all the action.
This is when timing the stock market become crucial for beginner stock market investors and day traders.

Knowing when to enter a trade and what to anticipate becomes 1 of the most important stock market basics ever new trader should learn.

Throughout this lesson we will refer to the stock market in terms of the activity a 3 year old would have during the day.

We will examine how the stock market like a baby allocates a time for eating, sleeping, and playing. Please follow the analogy carefully as your understanding of the stock market will be greatly improved.

Like a little baby, the market wakes up at 8am- for pre market trading, and a little action, once it’s had its bath and its breakfast, it’s ready for a day of crawling and jumping up and down:

This happens at 9:30 AM

The first sign of joy in timing the stock market will be seen at 9:35, where stocks which are bound to move during the first 30 minutes of trading will show their directional bias.

The next movement (either a change in direction or a continuation of play time) will occur between (9:55-10:10am).

This time is akin to when the baby is done playing with this toy and wants another toy. This analogy is represented by the market when the stock begins to stall or move in the opposite direction.

For instance if ABC stock was powerfully bullish between 9:35 to 10:00am EST, the stock needs a ‘break’ to digest this big move.

The stock will either retrace to a level of support and base, or it will hover at the top 3rd of its move.

The stock (baby) will then take some time out between 10:30-11am EST. After this hour break, usually around 11:15-11:30 am EST the market along with stocks will either carry on their morning move or take a nap.

Usually around 11am, depending on the time the baby woke up, they need an afternoon nap or they get grumpy and begin crying for no apparent reason.

As you can see in the stock market chart above; the stock started its move at 9:30 and advanced until 10:45 am.

Between 10:45 and 11am a sign that a break is needed in the stock is evident by the reversal sign red bar, followed by a slew of red bars.

The reversal sign was an indication that the baby need to sleep. The bars that followed the reversal red bar indicated that during that time the stock (baby) was a asleep and any attempt to trade the stock would be futile, unless, you placed a contrary position.

• Timing The Stock Market Part 2