Q. What signs to look for to sell stocks?
A. Here are four red flags that indicate the bull market is about to end:
1. The Market's Advance/Decline Line
When investors become more selective at the top of the bull market, the difference between the number of stocks advancing and the number of stocks declining will shrink.
2. Market Sentiment
At the top of the bull market, investor are overwhelmingly bullish, or at least more than 50% of investors surveyed showed optimism, this is not a good sign.
3. Leading Indicators
Before the economy turns recession, leading indicators such as the Conference Board's Leading Economic Index, which tracks the unemployment-insurance applications, manufacturing hours worked and new building permits, among other things, will turn downward. The stock market tends to begin to fall before a recession hits.
4. Inverted Yield Curve
If the Federal Reserve tightens too much, the yield curve inverts - meaning, when short term Treasury debt yields more than long term government bonds - it will choke economic growth and risk recession.
A. Here are four red flags that indicate the bull market is about to end:
1. The Market's Advance/Decline Line
When investors become more selective at the top of the bull market, the difference between the number of stocks advancing and the number of stocks declining will shrink.
2. Market Sentiment
At the top of the bull market, investor are overwhelmingly bullish, or at least more than 50% of investors surveyed showed optimism, this is not a good sign.
3. Leading Indicators
Before the economy turns recession, leading indicators such as the Conference Board's Leading Economic Index, which tracks the unemployment-insurance applications, manufacturing hours worked and new building permits, among other things, will turn downward. The stock market tends to begin to fall before a recession hits.
4. Inverted Yield Curve
If the Federal Reserve tightens too much, the yield curve inverts - meaning, when short term Treasury debt yields more than long term government bonds - it will choke economic growth and risk recession.
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