class. In Bear Markets, the primary signals that work are selling short into
strength and buying only the most oversold dips. There are times (in extreme
downtrends) when selling short into weakness can work.
Here is an example of Apple stock in a downtrend in the second half of 2012.
Notice that the 21 day EMA and the 10-day SMA both acted as descending
resistance as Apple made lower lows. It fell quickly from the $700+ level for no
fundamental reason. The decline was interrupted by one rally that lasted for 10-
days, and then fell back under the downslope moving averages and made fresh
lows.
Charts courtesy of StockCharts.com.
These charts are examples of letting the price be your guide in trading the price
action on the daily chart. People that traded the chart with the right key moving
averages and technical indicators suffered far fewer losses than investors that
were stubbornly on the wrong side of downtrends, or traders who had bearish
opinions in a bull market.
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