Shorting Stocks During Market Corrections
Selling Short stocks during an Intermediate-Term Market Correction or a Bear Market should be part of a Trading Plan if you are a Swing, Momentum, or Day Trader. Oftentimes when a Technical Trader is highly skilled, they can earn more on the downside action than upside action, particularly if the upside is in a Platform Candlestick Pattern™ or a choppy sideways action.
There have been many changes to the technical patterns of the downside in recent years. Knowing what to study in technical patterns to improve profits is necessary for Selling Short stocks during Market Corrections.
Here are 5 tips for Selling Short stocks during an Intermediate-Term Market Correction or a Bear Market:
1. There are many new Topping Formations. The older textbooks on Technical Analysis feature 5 main Topping Formation candlestick patterns. However due to the giant Buy Side Institutions moving their huge lot orders off the exchanges into Dark Pools and the numerous new order types available to them, Dark Pool Quiet Rotation™ which is the method of slowly lowering their quantity of held shares is now changing the structure of tops.
Chart example #1
2. Part of learning Selling Short stocks is to know when stocks will reverse and move up. Bottoming Patterns during Market Corrections are also different than the primary bottoms that most traders have learned. This example is to show that it is important to recognize when a stock is poised to move up instead of down. The key factor again is identifying the most important Market Participant Group which is the giant Buy Side Institutions. They have the ability to control price, during their Dark Pool Quiet Accumulation phase. Their order does not trigger their incremental buying, unless the stock is within a certain price range called a Dark Pool Buy Zone™ because they use a bracketed order.
Chart example #2
Martha Stokes CMT
TechniTrader technical analysis using TC2000 charts, courtesy of Worden Bros.
Chartered Market Technician
Instructor & Developer of TechniTrader Stock & Option Courses
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