Lesson # 1: There is no point HOPING when strong Bull market cracks below 200 dma
As you can see in the chart above: Chinese Shanghai Composite index tried its best to hold 200 day moving average but then once it cracked - it never recovered above it.
Lesson # 2: Below 200 day moving averages - it is the power of gravity that is at work and it keeps pulling the market down.
That's why we say: in Bear market - when stocks are below 200 day moving average - Sell the rally works. Also, no Low is the Low because market keeps making new lows. That's why let the market say it's done with downside before one starts hunting for value..
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Disclaimer – The state of the market notes is Deepak’s perspective on the market. The column is purely for educational purpose. Nothing contained herein is a solicitation to trade or a recommendation of a specific trade. By reading this publication you agree to make no trade relying in whole or in part on the comments of the writers