Use rallies and reactions as opportunities

20 Mar 2009

One day, one of the rallies that intersperse down legs in a bear market is going to be not just a rally but also the beginning of the next bull market.

There is no foolproof way to tell when that is going to happen.

This means that every rally is a nervous time for bears just as reactions are nerve jangling for bullish investors in a bull market.

One way to reduce the nervousness is to wait for rallies and reactions before taking out new positions.

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Look at the share prices
A way of doing this is to look at share price charts. For example, the FTSE All Share index made a double top in the summer of 2007, just when the first negative news about the sub prime crisis started.

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