MARKET CYCLE
May apat na cycle ang merkado. Accumulation Phase. Mark-Up Phase. Distribution Phase. Mark-Down Phase.
A market cycle can range anywhere from a few minutes to many years, depending on the market in question. Since cycle siya so nauulit lang. Una accumulation kung saan mga traders especially insti traders nag aaccumulate ng stocks kasunod nito kapag napansin ng iilan na hindi na bumababa ang prices at unti unti nagstable ay magbibilihan sila kaya tataas ang price papasok na sa second stage which is mark up stage kung saan nagkakaroon ng mga higher lows at higher highs.
Dito na stage lahat masaya. Lahat ng sentiments positive. After some time na pagtaas ay hihinto na ito. Ang dating optimism sa mark up stage nahalu.an na ng doubt. Dito halos nagbebentahan ang mga bumili noon sa accumulation stage kaya kahit anong dami ng buyers hindi na tumataas kasi nagdidispose na ng shares ang mga nag accumulate. Tawag sa stage na to is Distribution stage.
After ng distribution phase is yung Mark Down phase kung saan dahil narealize na ng karamihan na hindi na tumataas ang price at nadadaig na halos ng sellers ang buyers ay magbebentahan na kaya yung result is babagsak ang price ng isang stock.
After bumagsak ng price darating na naman ang point kung saan mag aaccumulate na naman ang mga traders dahil mura na sa tingin nila ang price especially insti traders. Accumulation stage na naman ulit. So paulit ulit lang.
Stages can last a month or a year or even a decade. If you want more information about market cycles e search ninyo lang sa internet at maraming articles about it.
Here is the emotional cycle of traders while market cycle is happening.
Then there is the cycle of market emojis which a lot of you will nod your head and say you can relate to this.
If you think about it, IT IS SO EASY TO EARN if you know the market cycle. All you need to do is wait until the stock is in the beginning of Mark Up Stage and start buying or better yet buy on Accumulation Stage and sell on Distribution Stage. WOW! Billion Peso idea!
Well, not really. You can’t really time the market. It’s easy to say “I could have bought here and sold here” if you are looking at the history of the stock pero if nasa kasalukuyan ka hindi mo alam kung anong stage ng cycle ang kasalukuyan mo na kinabibilangan. Let us look at this example.
If you don’t know how to read a chart kindly read this blog post first before proceeding.
Mula November 2016 until December 2019 ay dumaan si JFC sa apat na cycle. Let us focus on Accumulation Stage since kunyare gusto natin timing si JFC. Our Billion peso idea, remember?
So papasukin natin ang Accumulation Stage. Sasabayan natin ang mga insti bumili.
E zoom in natin.
E zoom out natin ulit.
We can conclude that our Billion Peso idea won’t work.
Hmmmm? Bakit wala gumawa ng indicator na kayang makita kapag may nag aacumulate or may nagdidistribute?
Meron. The indicator is called Accumulation/Distribution Indicator. Accumulation/distribution is a cumulative indicator that uses volume and price to assess whether a stock is being accumulated or distributed. Ito sya.
This is how it looks if e plot mo sa chart.
May apat na general idea when looking at Accumulation/Distribution indicator (A/D). Una, Kapag tumataas ang price at pataas din ang A/D ibig sabihin confirmed na ang trend is going up. Balikan natin, apat ang market cycle. Accumulation, Mark Up, Distribution at Mark Down. Nauulit lang ng nauulit yan.
After ng Mark Down mag Accumulation ulit. This can range from months to years. Ang galaw ng isang stock ay may tatlong direction. Uptrend, Downtrend at Ranging. Kapag paakyat tawag dun is Uptrend. Kapag pabagsak naman tawag dun is downtrend. Kapag naman walang masyadog galaw tawag dun is Ranging.
Si Accumulation Stage at si Distribution Stage ang tawag sa kanila if e classify mo as direction is Ranging since walang galaw masyado. Si Mark Up Stage sine paakyat if e classify mo ang tawag sa kanya is Uptrend while si Mark Down Stage naman is Downtrend.
Pag uusapan natin silang tatlo (Uptrend, Downtrend, Ranging) in the near future.
Sa ngayon I need to mention Uptrend at Downtrend dahil ky A/D. Tatlo ang general rule. Una, Kapag tumataas ang price at pataas din ang A/D ibig sabihin confirmed na ang trend is going up (uptrend).
Pangalawa, Kapag bumababa ng price at pababa din ang A/D ibig sabihin nito confirmed na ang trend is going down (downtrend).
Third, Kapag umaakyat or nag range lang ang price at ang A/D naman ay pababa meaning may divergence na nagaganap.
Ano ang divergence? Divergence occurs when an indicator and the price of an asset are heading in opposite directions. Kapag may divergence, kung anong direction ang indicator ay susunod doon ang price. Kapag umaakyat or nag range ang price at ang A/D naman ay pababa, sooner or later babagsak din si price.
Tatalakayin din natin ang Divergence sa mga susunod na topics but for now ky A/D muna tayo.
Ikaapat, Kapag bumababa ang price or nag range ito at ang A/D ay paakyat sooner or later aakyat din ang price.
If you want more ideas about trading please join Trader’s Lounge sa Facebook . It is a facebook group dedicated to help traders. We are pushing for free learning as our advocacy. You can also subscribe on our youtube channel which is Trader’s Lounge Official kasi dun video mismo ng mga lesson ang pinopost namin. I plan to go through every indicator available sa TA. i will teach you how to plot a lot of things sa chart. I will discuss sa near future mga divergences (the good and the bad.)
I want to be very clear. Don’t confuse an indicator over a strategy. An indicator will show you things but a strategy will tell you where to buy and where to sell.
The idea about market cycle has inspred a lot of traders. Maraming theories at indicators ang nabuo or nagawa dahil sa dito at isa na dito ang Elliott Wave theory na i will discuss and make a blog at youtube video soon.
Studying cycles is the best way to develop the ability to understand where the market stands in its cycle and what performance lies ahead. The market’s position in the cycle won’t tell you what’s going to happen next, but it will tell you when the odds are in your favor and when they’re against you.
If you want to learn more about stock trading join our Facebook Group called Trader’s Lounge.
Our advocacy is sharing ideas, experiences and knowledge to traders for FREE. We offer free Technical Analysis, Fundamental Analysis and Market Psychology learning materials for free.
We also have weekly lessons over there. We created different trading strategies like MAMA which made a lot of traders profitable. Other trading strategies include FISHBALL, PAPA, CALMA and more. We want to offer OFW’s, Employees and all Filipino people a chance to learn without paying a cent.
We also have a Youtube Channel wherein I myself discuss strategies and trading related topics.
Come join us. Let us push free learning.
3 Comments
mako solano
Isa n nmn po sa pandagdag sa conviction ko. Maraming salamat!
Cha
I really appreciate this topic! 🙂 Nasagot na ata yung matagal kong question pano ko malalalaman na nasa highest point na ang stocks at pababa na ulit ito. Then 2 weeks ago, nung natapos ko basahin ang Tabularasa saka ko lang din nalaman na ang term para dun is Distribution stage. 🙂
Been ignorant for years at invest lang po ako sa long-term pero hindi rin po ako fully naniniwala sa compounding (kahit naging member ako ng TRC) kasi at the back of my mind andun po yung question ko na pano if nabili ko sya at a higher price tapos hindi nila mameet ang TP dahil sa mga unexpected events tapos hindi ko nasimulan na mababa or kahit gitna pataas pa lang na price tas mamaya iaannounce na nila na to sell? Chinecheck ko lang po yung 1yr or 5yrs history ng price as basic lang na ganito ang checking kung gogo ba ako or not sa suggested nila. Nung di na ako member, sa COL fundamental na lang ako natingin. Hindi rin naman po ako consistent naglalagay kasi nga gawa ng doubt ko at if nakita ko lang bumababa sa highest prices nila yung stock at the moment dun lang po ako bibili. Kaya ayun, pulang-pula ang port ko at feeling lost ako sa next move na gagawin ko if mag-aaverage down ba ako, bibili pa more, lalo na ng mga stocks na wala ako tapos sobrang mura ngayon, etc. etc. until I met you!!!!!
You are really amazing talaga! Inspiring and helping a lot of unaware/uninformed/ignorant Filipinos like me to understand better the stock market.. 🙂 Dati ko pa rin po gusto maging trader rin kaya kudos po talaga sa inyo! More power and blessings po kasi you keep on empowering and blessing us with TL !
Carding See sun
Thanks and GOD bless.