[Nitin Bhatia]

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Declining Stage of Stock Market is that last stage of four stages of the Stock market. In this stage, stock corrects or enter into a bearish phase. In this video, we will discuss the Declining Stage of Stock Market and the summary of this 5 part video series i.e. Why Technical Analysis doesn’t work?

The biggest loser in the Declining Stage of Stock Market are the investors who invested during the distribution stage. The best way to trade this stage is to short the stock. Secondly, before the start of this stage, a stock or index may give a fake breakout. On price action, you can observe the stock or index forming lower high or lower low. The advance to decline ratio of no of trading days in distribution phase is less than 1. If you observe higher low on the chart then it means the declining stage is coming to an end.

The moving average points lower and the stock move towards 200 periods EMA. You should avoid long position during pullbacks.

The conclusion of this series is that you follow the top-down approach and check the stage of the stock before any investment decision. The best scenario of retail investors is to buy during accumulation and sell during distribution. You can also short during distribution and buy when the accumulation stage starts.

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