6 Tweets 46 reads Feb 12, 2023
Thread: How to Know if it’s the Right Time to Start Buying Stocks Again. 🧵
(1) The Reliable Follow-Through signal.
A follow-through day is a reliable indicator for re-entering stocks after a major correction. It occurs when the stock market index gains 1.5% or more on higher volume, 4 days after a bullish reversal attempt from the lows.
(2) 5-EMA Bottom Catcher.
Don't rush to buy at market bottom. Wait for a major index to close above its 5-day EMA. If price falls below 5-day EMA, look for quick bounce back. Weakness below 5-day EMA may indicate more selling or short-term chop.
(3) 10-Weekly EMA Trend Reversal.
The 10-WEMA may not signal market bottoms as quickly, but it provides a highly accurate signal. When any major indexes close above the 10-WEMA, it's a sign to invest in leading stocks with a good base.
(4) Nifty/RSI Divergence.
Double bottom and triple bottom divergences in Index charts indicate a strong and reliable sign of trend reversal. When Nifty or Bank Nifty hits a new low but the RSI shows a positive divergence, it's a good time to invest in strong stocks.
(5) Nifty/Market Breadth Divergence.
When the Nifty index reaches new lows but the breadth indicator shows signs of improvement, it's an early indication of momentum in the market and a good opportunity to invest in leading stocks with favorable risk-reward.
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