Get Ready for the Market’s Next Turn with John Murphy’s 10 Laws
With the S&P 500 ($SPX), Nasdaq Composite ($COMPQ), and Dow Industrials ($INDU) all trading below their 200-day moving averages, investors are facing a lot of tough questions. Should I sell all my holdings? Should I rotate into defensive sectors like Energy? Should I buy the dip?
When the stock market gets choppy, the best move isn’t to act right away. Sometimes, it pays to wait patiently for conditions to improve and prepare your game plan for when the market turns around. For long-term investors, the next turn could bring investment opportunities.
How will you spot the opportunities once they appear? That’s where John Murphy’s 10 Laws of Technical Trading can help. These principles can help new and experienced investors filter out the noise, analyze the market logically, and identify potential buying and selling opportunities.
In this special downloadable PDF (link at the end), we show you how to apply John's laws using StockCharts' charts & tools.
- Map the Trends: The direction of the long-term trend is the foundation of your analysis. Even short-term traders benefit from understanding the bigger picture and trading in the direction of the primary trend.
- Spot the Trend and Go for It: Once you’ve figured out the trend direction, match it to your investment timeframe. A short-term pullback within a longer-term uptrend may present a buy-the-dip opportunity.
- Find the Low and High of It: Previous reaction lows and highs can reveal important support and resistance levels, which can help you gauge if prices are likely to move higher or lower.
- Know How Far to Backtrack: Market pullbacks are normal. Understanding retracements can help you figure out how far a correction is likely to run before the trend resumes.
- Draw the Line: Drawing trendlines can help you identify areas where price may pause, bounce, or reverse.
- Follow That Average: Moving averages can help confirm trends and keep you focused on the stock market’s direction.
- Learn the Turns: Prices don’t go up in straight lines. Knowing how to recognize momentum shifts can help you spot when a trend is showing signs of fatigue.
- Know the Warning Signs: Some indicators can signal internal weakness before you see it in the price.
- Trend or Not a Trend: A trend doesn’t last forever. Knowing when it’s strengthening or weakening will help you choose the right investment strategy.
- Know the Confirming Signs: A sustainable move needs participation. Confirmation signals can help you judge whether buyers or sellers are in control.
The stock market is under pressure right now, and it’s a great time to prepare. That’s why we’re offering you a free copy of our guide to John Murphy’s 10 Laws of Technical Trading, so you can create a thought-out plan that will sharpen your technical edge and make you approach the market with confidence.
Download your free copy below. 👇
Have a wonderful weekend.
