A simple explanation of the stock cycle in one chart ๐
The whole cycle comes from the simple diagram below ๐
I used PLTR's weekly chart (which used 30MA, 40MA, 10MA) for a simple interpretation:
The area framed in yellow on the chart is its third stage. At this stage, stocks have gone through the process of switching from strong players (buyers who have already made a lot of profits) to weak hands (new buyers who have just entered). It can be seen that the area with a significant increase in trading volume is an area with a large number of changes;
The area framed in red in the chart is its fourth stage. At this stage, the strong players have basically left the stock market in the third stage, and the stock lost big purchases. As the stock price continues to interact with people's mentality, the price continues to decline until people's psychological defenses collapse and they sell the last stock in their hands;
The area framed in white on the chart is its first stage. At this point, weak players have almost sold their stocks in the previous fourth stage with huge losses. At this stage, stocks were sorted out at the bottom for a long time, and at the same time, strong players (big buyers) slowly began to establish huge positions. The overall trading volume is low, and the time period may be very long;
The white arrow in the chart shows that the stock broke out of the first stage and moved upward. At the same time, along with the huge trading volume (the trading volume framed in white in the chart), a large number of purchases entered at this time, rapidly raised the stock price, and the stock quickly began the second phase;
The area framed in sky blue on the chart is the first base of the second phase. Here, the stock has risen sharply compared to the stock price of the first phase. At the same time, a large number of new buyers have entered. At this time, buyers and sellers are close to balance, and the overall trading volume has become very dry in the last few weeks;
The green arrow in the chart shows that the stock price has broken through the first base. You can see a sudden sharp increase in trading volume (only 3/5 was completed this week). Good financial reports and future profit expectations stimulated buyers to enter the market very quickly at this time, causing the stock price to rise rapidly and sharply, and the second phase of the stock market began to continue...
Everything from the first stage to the fourth stage of the stock cycle starts over and over again. This was true 100 years ago, and it is likely that the same will be the case in the future, because the mentality of people trading stocks has not changed at all ๐ด๐ป
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MattSully : Nice analysis bro!
Do you have any other tickers on your radar? I believe OK mentioned that ARKK is looking similar, but thatโs an ETF.
sTone83OP MattSully: I haven't expanded my radar yet. I currently need to carefully evaluate all of my positions and do something like โcut the chrysanthemums and buy new tulipsโ because I have almost no cash now
378165813 : How long can the second phase last?
sTone83OP 378165813: I don't have a magic crystal ball, and I never predict it. Currently it has just broken out of its first base for two days, so this information is enough for me
้ญๅฎถ : What stage do you think Tesla is in?
sTone83OP ้ญๅฎถ: Open the TSLA weekly chart, then open 30MA. First see if the current price is above or below 30MA, then see in which direction 30MA is running now. I believe you can find the answer for yourself
icezzz : Thanks for sharing and really helpful
้ญๅฎถ sTone83OP: I don't know
Also, look at the trading volume. When it's over 400, the trading volume is very small.
icezzz : How do u trade stock like ARM ? not much info from chart
sTone83OP ้ญๅฎถ: You don't need to be clear to 100% accurate; just know that the price is below 30MA and 30MA runs downward, the above two points are enough
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