Look out for the shooting stars!

There are a few phenomenons in the stock market which you may want to watch out for to determine if the bull run is coming to an end soon. It is like an early-warning system.

What are the few phenomenons i will watch out for?

1.  The pennies start to run.

Be very wary when the penny stocks suddenly come alive and hog the top 20 volume counters. These are usually stocks that have no fundamentals to begin with and are what the hokkiens will say "5 cents 10 cents" stocks. 

My definition of penny stocks are stocks that are very cheap in monetary terms but expensive in valuation terms. In other words, they may only be trading at 10 cents but the reason why they are trading at 10c is because they are usually loss making or trading at have very high PEs. These stocks will usually start to run only after the blue chips and good stocks have 'finish running' and the profits made from those stocks are now being rotated into the penny stocks.

Whenever you see many penny stocks running, it is time to take money off the table.  

2. You start to see stars!

If the stocks you are invested in start to show you stars, it will be a good idea to tighten your stops. You can check out the different types of bearish stars here. Two types of stars are presented below for your reference. 

Shooting star

Evening star

It can be a shooting star, it can be evening star and they usually appear at the end of an extended run. Be wary when the stars start to appear!

3. Taxi uncles and housewives comes to the market

The above is a generalization. I am sure there are many educated tax drivers and sophisticated housewives. (so pardon me if you belong to this category. haha).

Basically it means people who never touch the market starts to flock to the stock market thinking there is easy money to be made.  For example if someone who doesn't dabble in stock suddenly starts to tell you what stocks to buy. You know the end is near!

4. When newspapers headlines are very bullish.

Usually you will see many bullish headlines at the peak. The reverse for a stock market bottom is true too! 

Here you go. I have shared with you the various symptoms which you should look out for. You will be able to see it when it comes. 

Happy investing.