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On June 12, 2014 you might have notice stocks sold off. To amateurs this might have come as a surprise but to professionals this was already expected. As I write amateurs are still buying stocks. They’re amateurs because they’re buying at the top of the market, which violates all rules to professional trading.
Buy Low Sell High
Most of you have heard the saying “Buy low sell High.” Most traders know this saying, but few follow its rule. Like all markets that reef profits the fundamental is to BUY LOW AND SELL HIGH. Following this is where profits are made; ignoring it is also where profits are loss. The stock market is no exception to this rule. This is why I encourage our readers to learn to read charts which plays as self-defense in the stock market. As a trader you always want to be aware of current market trends. The reason why is because markets have different trends, they are, up, down and sideways trends. By knowing the trend of the market you can plan entry and exit points. Knowing your entry and exit point of any market means you know your risk and rewards. So the question still remains why is the stock market falling? The following will reveal why, learn its lesson and you’ll stand to profit.
Why Stocks are falling?
The real reason stocks is falling is because markets are too high. In the stock market they call this overbought, when it’s too low it called oversold. Because markets are driven by human emotions overbought and oversold occurs all the time. Your job is to locate these instances then be in position to reef profit.
Stock Chart tells a Story
Investors and professional traders care very little about the news. They’re aware of its effects on the markets, but their real focus is a stock chart. To professionals, a price chart of a stock tells more truth then the media. This is because a price chart shows clues of buys and sells which will reveal to you supply and demand.
To be a successful investor you must learn to seek more truth. For example below is an article that was published by yahoo which was explaining the reasons for market declines. The Headlines reads “Wall Street slides on concerns about Iraq.” This is not to say this is a lie but the question is, is it all truth? While news can affect conditions of the market, but is there other factors as well? The following will expose to you these factors and you’ll begin to see more truth. 
The S&P 500 is Overbought
If you knew how to read a stock chart you would have seen the S&P (ETF for the S&P 500) is overbought. Once you realize this you would have timed the market and prepare yourself to go short. As I write, SPY is 194.29. Its high is 196.05 which put buyers in dangerous territory. Since a picture is worth a thousand words, below is a daily chart of SPY. Notice how close it is to it’s record high which means a huge decline is on the way. The slight sell off we’ve seen in June was due to the concerns of these levels. The point is if you want to remain profitable in the market these days all you have to do is seek more truth.
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