Market Bottom

A market bottom is a trend reversal after prices have been declining and then reverse direction from declining to advance upward. Market bottoms occur after prices have fallen enough that the sellers who want to sell have sold. Investor sentiment is very pessimistic at market bottoms because prices have been falling. Market bottoms are an event and a process. Sellers are often flushed out when prices are in a waterfall panic decline. On the way to an eventually bottom, price trends often reverse up and then back down several times before making a final low, making “bottom picking” dangerous for those investors who can’t tolerate the whipsaw.

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