Everybody knows you should buy low and sell high to make a profit in the stock market. However, this is difficult to practice unless you are willing to look at certain indicators before buying anything. One of the best guides for the stock market is the NYSE McClellan Oscillator ($NYMO
). To be on the safe side, do not buy stocks unless the NYMO is in oversold territory, -80 or less on the chart. The MACD should also be rising before you buy anything. I have shown a table below for various ETF buying points.
Whenever stocks are getting ready to go down, that is the time to buy TLT, the 20 year bond ETF. People and institutions will rush into bonds when stocks are falling, and the price of TLT will rise significantly. You can watch the price of TLT to determine a low point for buying it or you could look at the yield of ten year bonds at the U.S. Treasury
website. If the yield is near 2%, then stocks are at a high point. If the yield is around 1.50% or lower, stocks are near a bottom.
In addition to a high yield in ten year bonds showing a stock market top, the S&P 100 can also be an indicator for when to sell. When the strength % chart of the S&P 100
(OEXA200R) drops below the 50 day average line, that is the time to sell stocks. This often occurs in May in accordance with the old Wall Street saying of "sell in May and go away."