Markets are always dynamic. That leaves us with a little to no opportunity to see the exact market top (or bottom). Many traders who plan to find the market top usually end up seeing themselves hanging on for too long.
Indeed, failure will always be the result of the attempt to find the exact market top. Yet, there are signs to find an off-market top that indicates when the market correction is coming.
Knowing that may not directly give you the chance to point on the market top, but at least that allows you to gain profit while the market begins to show weakness. It will be comforting to know the signs of correction and the right time to make an exit,
Things to Consider to Find Market Top
All markets, the small or large ones, always move in waves. That waves can be either in a trend or contained within a range. Thus, you will find a market top from a rally of at least nine months market.
Trends can last for a long time, nine months may seem short by the historical standard. Take the market between 1942 and 2007, for example. The average bull market during the period was 56 months.
The 3 Signs of a Market Top
You will get insight into the market strength and weakness of these market indicators. Mostly, traders see the first two signals occur before the top is created.
The third signal, however, usually acts as the timing indicator that tells them the prices will head lower.
There is a Growth in Index, but the Number of 52-Week Highs Starts to Decline
Once the 52-week highs decline, then there is a fewer stock volume work to push the market to go higher.
The New York Stock Exchange (NYSE) has Peaked but Now is Declining, while the S&P and Dow Continue to Climb
If that happens, then the selective market indexes are climbing higher, while the broader market is struggling.
Major Indexes Move below the Prior Swing Low
If you see that, then there will be trouble, soon. Mostly, traders will see a fail uptrend after that.