Many stock traders will follow patterns in the market rather than invest in a stock that they’ve researched. The reason why so many traders invest in market patterns is because its far easier to trade if you can find a repetitive cycle, just think of it for a minute.
If you knew the market was going to move in a certain way at around the same time every day, wouldn’t you make a fortune?. Below, we’ve outlined several market cycles that happen either every day or over several days.
Most of these cycles can be around 80% accurate, its up to you which ones you want to follow. A good idea would be to take a good cheap stock from the Nasdaq & apply it to any of the market cycles listed below for a couple of weeks. See how it performs, if its making you money, then stick with it. Remember, these cycles are repetitive so you can use them over again & again.
* 10:30 a.m. (Usually 10:15 to 10:35., 1st high or low of the day)
* 12:30 p.m. (From 12 to 1:00 p.m., markets tend to reverse what they were doing at 10:30 a.m.)
* 2:00 p.m. (From 1:30 to 3:00 p.m., market trading heavier/trend for the day may change)
* 3:00 p.m. (From 3:00 to 3:20 p.m., one direction, which may or may not be the same direction that was established between 1:30 to 3:00 p.m.)
* 3:20 p.m. (From 3:20 to 3:40 p.m., change direction)
* 3:40 p.m. (From 3:40 to 4:00 p.m., tends to go back to what it was doing at 3:00-3:20 p.m.)
These rules can apply to any chart that follows the NASDAQ, NYSE or the S&P500. So for example any stock on the NASDAQ100 list should do the same as above.
The above rules will apply to the market most of the time but especially on ranging markets i.e. markets that tend to trade sideways as there is no real news moving them.
If used in conjunction with the market indicators i.e. MACD, RSI etc this information becomes a powerful tool for taking lots of money out of the market.
Multi Day Cycles
General Market Tips:
Strong up Mondays usually means down week.
Strong down Mondays, usually mean up week.
Markets rally in mornings, sell off in afternoons = bearishness
Markets sell off in mornings, rally in afternoons = bullishness
Another way of making great trades is using the little known multi day trading cycle.
Here’s how it works
On the 3rd, 5th or 8th day a stock will generally reverse course! I know its hard to believe but its correct. Suppose a stock is falling. Very often the stock will halt its slide or even rebound on the third day. Now if it doesn’t hold up on that third day watch for the Falling to stop on the 5th day and then again on the 8th day.
The 8th day is my favorite as you can make spectacular gains on this day. This is probably one of the best kept secrets around. Again, if you use this information with the other indicators & use a 10 day MA in Bigcharts.com, then you should have a good shot at getting in at the bottom. Also don’t forget to use the charts at marketvolume.com to give you an even better edge on things.