Some of Stock Market timing strategies are as follows:
Buy at the base before New Trends-These price dynamics follow the old market wisdom that “the bigger the move, the broader the base”.
That is visible on the chart, see this stock, consolidated in range of 65 to 80 for almost 6 months and then big bullish move hit high of 120 within 2 months. Means 6-month accumulation and patience given 50% return on invested capital in last 2 months!!
Buy near Support, sell at Resistance-buying into the most negative sentiment at the bottom of the range offered the most profitable entry.
Let see above us dollar against Swiss franc’s 60 min chart where each support, as well as resistance, worked classically. Giving almost 20 pips profit per move.
Building Bottom Fishing Skills -Identify Correlated Markets and identify control between equities, bonds, and currencies and build rotational strategies in and out of correlated sectors on a daily, weekly and monthly basis.
See above weekly chart of S&P 500 index where RSI used to find market bottoms in 2002-2003 and in 2008-2009.
Curve fitting – A major stumbling block for many market timers is a phenomenon called “curve fitting”, which states that given set of trading rules has been over-optimized to fit the particular dataset for which it has been back-tested.
Time Zone Arbitrage – Studies have concluded that some simple strategies will outperform the overall market. One market-timing strategy is referred to as Time Zone Arbitrage. This is a form of arbitrage in which an investor takes advantage of price discrepancies that occur when some stock markets are open while others are closed.
Many amateurs consider market timing to be a form of gambling based on pure chance because they do not believe in undervalued or overvalued markets.
This is same as the efficient-market hypothesis claims that financial prices always exhibit random walk behavior and thus cannot be predicted with consistency. Some consider market timing to be sensible in certain situations, such as an apparent bubble. After the bubble, a crash can persist for extended periods; stocks that appear to be “cheap” at a glance, can often become much cheaper afterward. These are some strategies to time the market and convert opportunities into profits.