Identifying bear traps can be done from the following aspects: First, analyze the news on the surface, and be extra careful when encountering continuous negative market conditions. Second, from the analysis of trading volume , it is easy to create an atmosphere where the yin and down trend is far away. The third is to analyze the macro fundamentals to observe whether there are substantial short -selling factors. Fourth, from the perspective of technical form, it is easy to cause a chain reaction of market panic. Fifth, from the perspective of market sentiment, when the market sentiment is extremely low, the stock market is closer to the real bottom.
How to identify bear traps in the stock market
- Analysis on the news
The main funds often take advantage of publicity to create a short-selling atmosphere. Therefore, when investors encounter bad market conditions, they should be extra careful. Because, it is under the heavy bombardment of various bad news that mainstream funds can easily build positions.
Second, from the analysis of transaction volume
The characteristic of the short trap in terms of trading volume is that with the continuous decline of the stock price, the volume energy is always shrinking irregularly, and sometimes there may even be infinite empty drops or infinite plunges on the disk, and the intraday trading of individual stocks is also very inactive. Investors have created an atmosphere that the yin and down trend is far away. Precisely in this pessimistic atmosphere, the main force can often easily build positions on dips, thus forming a bear trap. (Don’t be blind to bargain hunters, you must seize real opportunities!)
- Analysis from the Macroscopic Fundamentals
It is necessary to understand the policy factors and macro fundamental factors that fundamentally affect the strength of the broader market , and analyze whether there are substantive negative factors. It is easier to form a bear trap.
Fourth, from the technical form analysis
The characteristics of the bear trap on the K-line trend are often several consecutive long Yinxian plummeting, running through various strong support levels, and sometimes even accompanied by downward gaps, triggering a chain reaction of panic in the market; in morphological analysis, bear traps Often, it will deliberately trigger the breakdown of the technical form, making investors mistakenly believe that there is huge room for decline in the market outlook, and they will sell their holdings one after another, so that the main force can undertake a large number of cheap stocks at a low level . In terms of technical indicators, the bear trap will lead to serious divergence characteristics on technical indicators, and it is not a divergence phenomenon of one or two indicators, but is often a simultaneous divergence of multiple cycles of multiple indicators.
Five, from the market sentiment analysis
Due to the long-term decline of the stock market, a heavy hold-up plate will be formed in the market, and the popularity is constantly being exhausted in the hold-up. However, it is often at a moment when market sentiment is extremely sluggish, which just shows that the stock market is not far from the real bottom. It is worth noting that after four years of sluggish bear market , the systemic risk of a sharp decline in the index is already very small. Excessive bearishness will inevitably lead to a new bear trap.