When stocks crash what are ways to decide if the crash is real or just a little hiccup?
First I recommend getting a deep understanding of the macroeconomic picture and then decide whether or not to classify the economy as bullish or bearish. Then review stocks to see if the long term smoothed PE ratio (like PE10) shows the market is undervalued or overvalued.
Then take a look at momentum trader’s technical tools. If stocks lose momentum and the trend is broken then it is time to get out. A common one is the death cross where the 50 day …Read More