Signs of market reversal

We are in a bull green rally for several weeks and most barriers of ASI were broken and still heading toward the top.As you all suffered from crash in CSE at past years after such a bull we need trade with precautions for reversal.
So please experts can you all tell us what are the signs of market reversal or a correction and what are the measures that we have to take when time comes, with your analysis and past experiences which will be invaluable.

(I'm newbee with small profile and plan to invest in fundamentals for mid and long term)
Thanks

ecse wrote:We are in a bull green rally for several weeks and most barriers of ASI were broken and still heading toward the top.As you all suffered from crash in CSE at past years after such a bull we need trade with precautions for reversal.
So please experts can you all tell us what are the signs of market reversal or a correction and what are the measures that we have to take when time comes, with your analysis and past experiences which will be invaluable.

(I'm newbee with  small profile and plan to invest in fundamentals for mid and long term)
Thanks

Good question, ecse; it's never too early to be prepared for the inevitable...
However, you need to differentiate between retracements and reversals, and can do this by combining technical analysis with other identification measures. Otherwise, you could exit too soon or hold onto losing positions.

The following are the most popular tools used to do this:

Fibonacci Retracements
Fibonacci retracements are excellent tools for calculating the extent of a retracement.

Pivot Points
Pivot point levels also are used to determine the extent of a retracement. Most traders look at the lower supports (R1, R2 and R3). If these are broken, then a reversal may be forming.

Trendline Supports
Finally, if major trendlines supporting the larger trend are broken on high volume, then a reversal is most likely in effect.

http://www.investopedia.com/articles/trading/06/retracements.asp

+rep for both

Very good question. Thank you.

I saw there were lot of posts like this in this forum.

Is it worth to hold SHL?
What about JKH?
Is warrants good to trade?
Then there were various types of posts on momentum stocks (Now I don’t use speculative stocks because we are speculating for other stocks as well. Either we say they are going up or going down)
Is plantation good?
Hidden Gems (Actually some of them are not hidden gems. Because everybody know these stocks now. There may be hidden gems almost all the sectors. We have to go deep into the sector to find them.)
Future winner TYRE
Banking sector rally
Power sector rally
Plantation rally
How about ASIR?
Lists goes on………………………………..

Simple answer is we are gradually seeing demand for all types of stocks due to strong market situation. Some stocks are still in the accumulation stage and some just have come out of their base building. After Pakistan market Indian market had a great run and there is a great demand for all types of stocks now. Now we are seeing uptrend in Sri-Lanka. More than earnings stocks are going up these days due momentum and demand for stocks. Despite making losses or less than expected earnings stock prices will go up in bull markets. In a bear market all types of stocks will go down. When bull or bear market start we cannot identity top or bottom. In short investor/ traders will have opportunities in almost all the sectors provided they buy them on market weakness/ pullbacks and on great value. After some great run we are seeing some initial weakness in the banking and finance sector now. These are normal in a major uptrend. I think investor interest will shift to other sectors in the coming days and weeks according to market behaviour during last two days. There may be less interest for sectors such as banking/ finance, Power and diversity sectors before their next rally in the coming weeks. We saw some pause on stock prices of JKH and COMB on Friday. Good luck

Market tells us before happens any trend reversals;
one of simple signs of market reversals, which anyone could understand as the break of trend line... So, you can take some precautions as you mentioned...  

Here's another;
Negative & Positive divergences of MACD/ RSI (any momentum ind:)

NC wrote:Here's another;
Negative & Positive divergences of MACD/ RSI (any momentum ind:)

helow NC,,  you r doing a great job, enforcing the crowd to understand chart philosophy.

 the most important fact is that most institutional buyers , foreign buyers , HNWis enters to stocks when they have clear attractive chart patterns. and they do exit when the chrats ask to sell..   there are some other factors to..

 and i d like to add some to your MACD chart , just have a look at the red lines which are apexed and concentrated towards . folowing this concentration it jumeped up like a spring , and then reversed .  





so this can be the surge of super september with 78 on board. the surge can be extreme powerful if we have some corection at this stage.



any way , japaneese  MR. Kadan Yang    add some boost up..  we ll hope chineese president MR  Kotas Nang will  also do the same

Woe we got a good thing going on here ........

salute to antonym, NC and akalanka..

Machan ANTO,
How is things going on? After long time see you.

Isnt it seems like the trend is to the big shares? LION, CTC, CARS and NEST could move further which make more room to increase ASPI?

Akalanka wrote:

NC wrote:Here's another;
Negative & Positive divergences of MACD/ RSI (any momentum ind:)

helow NC,,  you r doing a great job, enforcing the crowd to understand chart philosophy.

 the most important fact is that most institutional buyers , foreign buyers , HNWis enters to stocks when they have clear attractive chart patterns. and they do exit when the chrats ask to sell..   there are some other factors to..

 and i d like to add some to your MACD chart , just have a look at the red lines which are apexed and concentrated towards . folowing this concentration it jumeped up like a spring , and then reversed .  





so this can be the surge of super september with 78 on board. the surge can be extreme powerful if we have some corection at this stage.



any way , japaneese  MR. Kadan Yang      add some boost up..  we ll hope chineese president MR  Kotas Nang   will  also do the same

whoooo......>>>>>> great Akalanka... same wedge on both year,
I'll do further analysis on this...there's a huge HPP, perhaps it could tell us more on it

We got good 4 chartists.. Shark, Akalanka, Anto and including me We can learn from each others, share our views, discuss could do a great team work...

This is the change we are looking guys..... more knowledge more power what we do is charity ......

Akalanka wrote:

NC wrote:Here's another;
Negative & Positive divergences of MACD/ RSI (any momentum ind:)

 and i d like to add some to your MACD chart , just have a look at the red lines which are apexed and concentrated towards . folowing this concentration it jumeped up like a spring , and then reversed .  

Mr Akalanka,

Could you please give us some more information on Concentration and Apexes on MACD charts. It would be an extremely useful education for us all.

Thanks a lot.

Do I want to believe this....???  OMG  


I made a hypothetical assumption that ASI was 5000, in order to draw a HPP.
As noticed by Akalanka, the wedge appeared in 2010 September, later jumped and boost unbelievably. And the another wedge has appeared in 2014 September, as noticed by him explaining from MACD. And so on the main chart the wedge appeared and shows in the same way parallely, in same degree as I've drawn on the chart.
Based on my above said assumption, the point "D1" in year 2010 September should end @ 4500 (1.61 Fib. ext.). It make a wedge and jumped to 2.61 Fib.ext. (D2)
And in 2014 September the point "D1" should end @ 7500 (1.61 Fib. ext.). This time the 2.61 Fib.ext @ 9350. (D2)
Both are looking amazingly similar... Could it be happen this time?? Do history repeat itself...???

Thank you friends for your great efforts and educating us. Trend is our friend.

Both are looking amazingly similar... Could it be happen this time?? Do history repeat itself...??? Shocked Shocked


history repeats .... aint it..

hope so.. NC your explanation is superb . so the coming week will play a significant role. In a previous thread i commented abt the positive factors we do have to support. if those optimistic factors do sustain deffa we ll be in great dark green.

And on this situation we have to be very careful to not to get in to trouble, cz if history repeats .. we may have some chance to save some without burning hands..

To lux.... i m just collecting some ex for you .. wait

friends i m just adding to here with my little knowledge and i always welcome your ideas.

  when concentrating on chart philosophy as i ve noted above, big buyers and sellers will always follow chart patterns . so if we get our self used to it we also can get in to the boat at the correct time and can exit without getting our hands burned.

studying chat patterns is a vast area , i suppose . there are various types of chart indicators..  as an example ,simple chart patterns , moving averages , RSI , MFI , MACDs , stothastics , momentum , harmonics , ...  and much more.  but i think it will be better to get familiar with some indicators and to get master on it.  so we ll be able to earn some bread n butter .... even much more .    

At the early stage of an investor in CSE   i feel it will be good to get hurt at the beginning  rather than at the end.  so new be can start with small amount ..  even at lost can earn some valuable experience and recover back with huge capital gain at the end. otherwise loosing all the eggs at the end will  end up in ST elevated Miocardial elevation with troponin positive.

here  i do conc on some patterns with apexs as lux highlighted.  there are 4 types of apexes i observed that do form .  and it should be remembered that all apexes will not end up with upward surge. it can go downward even following .



so as shown apex can be end up with up surge or down bottom.

 why does an apex form..

just think about X stock .  at a bottom down cool stage ppl will collect it . and if it is noted with growth potential it starts positive movement ,which drags to a resistance level . and at the resistance it will pulled back to support level .  on then it attracts buying so it goes up again.

on this movement long term investors will hold , day traders will drop with Small margin.  when this drop is seen by ppl who are not confident to hold will drop too . but if the stock has growth potential it will move forward again. but when ever its coming back to resistance level it can be pulled down by sellers who tries to exit who may be on margin ..etc..   like wise this up down movement goes forward for a period.  
 on this movement a positive factor we can identify is that green volume is higher than the red volume.
 to have a sound idea to note its good to analyse RSI, moving averages 20,50 , volumes ,bolinger bands mainly ..  there may be more ....

while this journey goes on a positive factor or negative factor will determine the final wave ..  up or down..

positive factors can be ... profits , reports , directors buying in , mergers , rumors
negative factors can be....  loss , forign selling , capital loss , economic cricis......


here just have a look at the following ex..  KAPI , JKH , TAFl  which i think most of us have traded even once in our life in CSE..

Kapi ..    rather than small apexes , it had a big continuous concentration . it burst off with good green volume , with its improved performance.



Have a look at JKH too .. same situation



have a look at TAFL too
it had two consecutive surges and at the end it was droped with huge red volume.mainly due to poor performances.



  so here i ve just given some brief idea ..  i d like to have some of you vauble comments to improve more n more

So what is the conclusion??? Will the market go down or the market will fireup like a rocket???????????

Because pls undrstand that there're people in this forum who doesn't understand the charts and stuff.......

Please............

Akalanka wrote:friends i m just adding to here with my little knowledge and i always welcome your ideas.

  when concentrating on chart philosophy as i ve noted above, big buyers and sellers will always follow chart patterns . so if we get our self used to it we also can get in to the boat at the correct time and can exit without getting our hands burned.

studying chat patterns is a vast area , i suppose . there are various types of chart indicators..  as an example ,simple chart patterns , moving averages , RSI , MFI , MACDs , stothastics , momentum , harmonics , ...  and much more.  but i think it will be better to get familiar with some indicators and to get master on it.  so we ll be able to earn some bread n butter .... even much more .    

At the early stage of an investor in CSE    i feel it will be good to get hurt at the beginning  rather than at the end.  so new be can start with small amount ..  even at lost can earn some valuable experience and recover back with huge capital gain at the end. otherwise loosing all the eggs at the end will  end up in ST elevated Miocardial elevation with troponin positive.

here  i do conc on some patterns with apexs as lux highlighted.  there are 4 types of apexes i observed that do form .  and it should be remembered that all apexes will not end up with upward surge. it can go downward even following .



so as shown apex can be end up with up surge or down bottom.

 why does an apex form..

just think about X stock .  at a bottom down cool stage ppl will collect it . and if it is noted with growth potential it starts positive movement ,which drags to a resistance level . and at the resistance it will pulled back to support  level .  on then it attracts buying so it goes up again.

on this movement long term investors will hold ,  day traders will drop with Small margin.  when this drop is seen by ppl who are not confident to hold will drop too . but if the stock has growth potential it will move forward again. but when ever its coming back to resistance level it can be pulled down by sellers who tries to exit who may be on margin ..etc..   like wise this up down movement goes forward for a period.  
 on this movement a positive factor we can identify is that green volume is higher than the red volume.
 to have a sound idea to note its good to analyse RSI, moving averages 20,50 , volumes ,bolinger bands mainly ..  there may be more ....

while this journey goes on a positive factor or negative factor will determine the final wave ..  up or down..

positive factors can be ... profits , reports , directors buying in , mergers , rumors
negative factors can be....  loss , forign selling , capital loss , economic cricis......


here just have a look at the following ex..  KAPI , JKH , TAFl  which i think most of us have traded even once in our life in CSE..

Kapi ..    rather than small apexes , it had a big continuous concentration . it burst off with good green volume , with its improved performance.



Have a look at JKH too .. same situation



have a look at TAFL too
it had two consecutive surges and at the end it was droped with huge red volume.mainly due to poor performances.



  so here i ve just given some brief idea ..  i d like to have some of you vauble comments to improve more n more

Good analysis. We also need to study personality of the stock. I think in some situation stock traders might sell stocks due to settlement of credit, when they see short term market weakness and when they find better one. In this type of situations some stocks will have some downturns. When intelligent players come to the scene again they will start to go up strongly. Both KAPI and TAFL went down below Rs.50 recently. Suddenly some support reached and both are trading above Rs.50 now. Below Rs.50 is one of the best buy points in the current major up trend. Very recently JKH went down to around Rs.219. This was one of the best buy points. Selling Volume was very huge. However it came back strongly from that point and now it is trading around Rs.259 after passing Rs.250/.. Some other examples: There were heavy selling around Rs.190 and around Rs.110 for SAMP and COMB. Volume was very huge. Intelligent market players accumulated these stocks at these points. Now Samp is trading over Rs.230 and COMB is trading around Rs.160/-. As long as their intermediate trend is up we should stay bullish.

It is better to buy stocks in pullback and pause before they form next uptrend. My gut feeling is there will be demand for stocks in sectors such as food, plantations, health sectors and consumer discrepancies in the coming days and weeks. Next week we may see some short term weakness or pause in sectors such as banking and finance sector and diversify sector before their next rally.

Overall intermediate trend is up for many sectors. It is better to focus on undervalued sectors now. As market has all types of traders/investors it is normal to have volatility. I believe lot of pullbacks and market pauses will create opportunities in a major uptrend. Good luck

Great Akalanka !!!

indi009 wrote:So what is the conclusion??? Will the market go down or the market will fireup like a rocket???????????

Because pls undrstand that there're people in this forum who doesn't understand the charts and stuff.......

Please............

@ Indi; my personal target is 7500, even 7200-7300 there is a possibility for a correction. And if it make a correction on this stage, I definitely like it, because its more healthier and sustainable, and we can buy more at a discount.. And most importantly, don't worry about ASI, keep look at the charts, news of your stocks in your portfolio, it tells you everything not ASI. So, concentrate on the core its keeps your mind simple and free  
I do these readings like we talking about politics, global economy, EU crisis (රටේ නැති වල්පල් ) blah blah when a set of same minded people get togethered, they discuss, argue with each others... That's their mind set and they enjoy from it>>>

Thanks Akalanka

What I notice was we are having nice pullbacks and short term pause or minor volatility in stocks time to time. When some sectors and stock become active some other sectors/ stocks becomes inactive.

Examples:

Behaviour of ELPL

Initial active trend from Rs.17 onwards. Short term minor volatility/pause below Rs.20 and then break out with key psychological barrier Rs.20 with large volume and then went up to Rs. around Rs. 26 to 27 levels. Now it is trading around Rs.25/- in low volumes and having a minor volatility and pause I am waiting to see what is happening next?

COMB some strong activity around Rs.100. Went up to Rs.110/ had some minor volatility and with pause. Gradually this process continued until around Rs146. traded for a while below Rs.145. Broke key psychological barrier Rs.150 with large volume and now it trading around Rs.160. I saw some weakness on COMB on Friday. So this process should continue as long as major uptrend in intact.

Next week at least first two days stocks such as COMB and JKH might have pause or some weakness. Sectors such as Banking and Finance, Diversity and investment trust and power, hotels and energy sectors may be dull and might see some weakness. On the other hand other sectors such as
Health, production, food and plantations might have some life. Those inactive stocks in many sectors also should become active next week onwards. Have a nice week end!

What I see is that market corrections will take place with the movement of policy rates. Until the next Jan policy rates will remain at the lower level to enhance the private credit growth to economic development. However, though CBSL is striving to keep the interest rates lower at the moment, since it's an artificial effort, rates will move upward after the next presidential election. As a result, investors in the equity market will move to fixed income gradually and equity market will have a gradual decline. Therefore, past trends will not arise as it is. All depends upon political and economic factors.

EWML you are correct