I am going to repeat the quote that I wrote last Monday in the post titled General Market Update; from a fund manger from Oppenheimer Capital named Eugene D. Brody:
“Sell stocks whenever the market is 30% higher over a year ago”
Here’s another quote from Victor Sperandeo (I highly recommend his book):
“…the median extent for an intermediate swing in the DOW during a bull market is 20 percent. This doesn’t mean that when the market is up 20 percent, it’s going to top; sometimes it will top earlier, sometimes later. However, what it does mean is that when the market is up more than 20 percent, the odds for further appreciation begin to decline significantly.”
“Thus, if the market has been up more than 20 percent and you begin to see other evidence of a possible top, it’s important to pay close attention to that information.”
I tend to agree with what Vic Sperandeo says especially since I think his book is one of the best around. By reading his entire book, you will understand where he is coming from and how he concluded that 20% represents a key number where odds decrease significantly. History always repeats!
How about the downside? How much should the market decline (%) before buying?
Best wishes,
Declan
That depends on support levels and moving averages. I also use Fibonacci levels to help determine possible retracement areas. i don’t have a set number to start buying. A correction of 15% or more would raise a green flag to look for candidates to buy but the overall trend would have to be monitored.