Australian (ASX) Stock Market Forum

Warning Signs of Market Corrections!

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Hi all,
Thought I'd start a thread about finding Warning Signs of Stock Market Corrections.
Knowing when the market is about to change course can help a trader protect any profits they have accumulated and even profit from the correction itself.

I thought I'd share some of my own basic analysis which signaled to me that the US Market was changing trend. Of course I had no idea the market was going to react like it did in the last few days, but knowing when to take money off the table is an essential knowledge to a traders success.

In this Hourly Chart below you can see the down trend in the Volatility Index has broken the above resistance trend line on 16th of April, then tested it as support as well as other key support levels (which where previous resistance levels). So you can clearly see the VIX changing course here. Of course in general, the VIX trends up while the Market is trending down, and is what I like to call my Market Fear Indicator

It would be great to see others share some of their analysis and knowledge on this topic

vix1.png
 

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Go to my S&P post, last in the thread.

Explains everything from correlation breakdowns (gold), to underlying pschology (changing reaction to positive earnings results), market internals (breadth), VSA, and global macro reasons for a pricing out of risk.
 
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