A trader / investor should learn to reconginzie stock market tops and bottom, which can lead to making more profitable decisions either at the top or at the bottom by delaying buying to a more favourable time or by selling before investors start dumping en masse. The best time to sell is at the top and the beat time to buy is at the bottom.
Signs of stock market Top
The following signs can be recongized as some of the indications of market top
1) High valuation level
2) Dividend yield falling well below three percent or industry average.
3) Widespred bullishness
4) Belief that present scenario is different and history will not repeat itself yhis time.
5) Trumpeting enormous gains to be made in the stock market by professionals and media.
6) Rising interest rate
7) Stocks prices no longer reacting positively to strong earnings as anticipated benefits are already priced in.
8) Trade volume expanding significantly
9) Excessive speculation among price stocks.
10) Breakdown / weaken of a large number of blue chip stocks
11) Market unable to move despite increasing volume
Further Reading: How To Make Millions When The Bulls Returns
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