Features bear hunting


Everything is subject to common laws of nature, and the rise must inevitably decline. To stay in the stock market in the period <weather> want to cancel exposure, lots of patience and precise tactics.

What is good and what is bad

As always, let's start with some definitions. So, what is a bear market? It would seem, from a technical point of view, no significant difference between the two <feral> markets not: if all of the major trends are down - this bear market, and if up - bullish.

But psychologically, these two markets <feel> completely different. It is generally agreed, feeling, perception, the bull market <good> and bearish - <bad>. And this is certainly true for most investors. If you are long and start a bear market, you will gradually lose some or all of its assets invested in securities - while in a bull market, it would only grow. The general opinion expressed by a market guru, who said that bull markets - <correct> and bear - <incorrect>. Bull markets welcome a bear - no. CNBC somehow arranged a special program dedicated to overcoming the NASDAQ 4000 mark up. And when the same index for 4000 fell down, no particular reaction.

Sometimes even the state intervenes in the market, trying to keep him from the bear state (stop trading for some papers, or even the whole market, not allowed to open short positions on cheap stocks, etc.).

In my opinion, the whole point here is firm belief that markets <to> grow. Therefore, when the markets go down, and there is growing conviction that something was wrong. While traders in general do not care for what the motion to make the belief in the natural growth of markets present in the majority of traders. Hence the well-known among the American traders trouble opening short positions, buying put options, etc. Interesting: the belief in the natural growth of the market so irrevocably that when markets go down and go, most players stubbornly sees this as an opportunity to enrich themselves at the expected growth ever, not on ongoing fall. Used around the following arguments: <Even after the collapse of the 1987 Bulls returned all their losses and have earned a lot of money, because for several years Dow Jones has increased more than 500%>. These stories only help to strengthen faith in the natural upward movement. Today, therefore, many market gurus like AJ Cohen (AJ Cohen), see no signs of a bear market, but only some <bearish correction>. It should be noted, however, that in the history of the Dow Jones had very long periods, more generations, when the markets are not going up.

Now look at the difference between bull and bear markets from a position trader. The main sign of a bear market - lack of breakout. A bear market in general to distinguish a <muted> emotions, lack of strong sharp movements and growing stagnant. Quick nervous movements and reactions, both up and down - striking manifestations of the bull market. And all the bears is relatively slow and easy.