the bottom of the stock market is one of the most profitable and risky markets, so all businessmen and investors must study the situation well and intensively to reduce risks by a large percentage. In this article, we will show you how to find the bottom of the stock market (a significant decline in the stock price, where the current price is lower than the purchase price of the stock).
How to find the bottom of the stock market
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| identify the bottom of the stock market |
Most stocks are undervalued
When the majority of stocks are undervalued, it puts a high probability that the market has bottomed out or is about to go down.
Reflection of most bad news in the market
When serious bad news happens, the stock price will start to drop. It is likely that the share price will rise again after a certain period of time.
low volatility
The markets usually get very volatile before they go down. When the market bottoms out, the volatility becomes much lower, and the price starts to stabilize as most of the sellers exit.
Very negative forecast
Mostly when a decline occurs very negative expectations are issued for those stocks, and this happens by very large institutions saying that the market will go much lower than it really was.
Big difference between value and price
When a large difference appears between the stock price and the company’s value, this may mean that the market is very close to the bottom. Sometimes, when this happens, opportunity hunters show up and drive up stock prices sooner or later.
When prices are at historical lows
Usually, during downturns and downturns, stock prices reach historical lows. A decline can be predicted when shares begin to be sold at the prices they were sold in previous years.
When the majority recommend selling
When the majority of people recommend selling stocks, it means that the bottom of the stock is very close. In such a situation, the shares are sold at a huge loss, which causes the emergence of strong buying power.
When everyone complains about huge losses
When a lot of people start complaining about the massive losses that have happened to them,
it might be a good time to start watching the market to see when a drop will happen.
Stop expecting more bad news
Sometimes, the market drops due to serious bad news such as a slowdown in the global economy. If all the bad news about the slowdown gets published and stops being published,
only the good news will start to appear and as a result the market will go up.
Technical indicators indicate oversold
When most technical indicators indicate that the market is oversold, it may be a good idea to look for other factors to see if the market is about to hit a bottom.
With the previous steps, you can anticipate when the stock price will drop and when the market may reach the bottom. Which enables you to reduce the percentage of losses that you may be exposed to.