Free Stock Market Course Part 28: Market Analysis

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Chapters:
00:00 Market Context
03:16 Market Analysis
08:18 Long-Term Charts
15:38 Market Phases
23:47 Market Phases II
29:41 Bull and Bear Market Terms
Module 5 Section 1
Market Context
To help make good decisions, it is important to understand the current market climate.
There is a delicate balance between basing decisions on current conditions versus following the herd.
Objective conclusions based on unemotional data and analysis gives the greatest chance for success.
Market Analysis
The main tools that are used for analysis can be broken down into three main categories:
1. Fundamental analysis:
This mainly includes the news.
Different events that go on in the United States, as well as across the globe, can have an impact on the SPX, as well as individual stocks.
2. Technical Analysis:
Studying charts and Indicators.
The majority of the analysis time is spent using this approach.
3. Mental Analysis
Dealing with emotions
The mental process of entering, maintaining and exiting a position.
Long-Term Charts
Two types of charts, going back to 1980, are displayed:
1. Logarithmic Price Scale (Log):
Prices are spaced based on the percentage movement. Often the default.
2. Linear Price Scale (Arithmetic):
Prices are equally spaced and show absolute values.
Which is best?
Both
Multiple time frames are displayed using Log and Arithmetic scaling:
Daily (200 SMA)
Weekly (50 SMA)
Monthly (12 SMA)
Market Phases
1. Bull Market:
The long-term trend of the SPX is up.
The SPX has been in a Bull Market since 2009.
A correction is when the SPX falls 10% before resuming an uptrend.
In early 2020, some market indexes fell 20% from all-time highs, which signaled a Bear Market. However, the markets have made a strong rebound and are currently at all-time highs.
2. Bear Market:
The long-term trend of the SPX is down. It starts when an index falls from an all-time high, or significant-top, 20% or more.
As of October 2021, the markets have recovered and have resumed the Bull Market.
3. Sideways Markets:
Within a longer-term Bull or Bear Market, it is very common for the SPX to remain trendless when analyzing shorter time-frames.
The SPX Investing Program helps students to identify which trend the SPX is currently experiencing in all time-frames and which strategies are best to implement.
Market Phases
Bull & Bear Market Terms
Secular Bull (Bear) Market:
Categorized by above (below) average stock market returns over a period of nearly a generation.
Cyclical Bull (Bear) Market:
The average length approximates that of a business cycle.
For example, since hitting bottom in March 2009, equities have experienced a more than 12-year cyclical bull market.
Due to the length this could be classified as a Secular Bull Market.
The question on every investor's mind should now be:
Was 2009 the beginning of a new secular trend? Or merely a cyclical divergence within a secular bear market?