Technicals: Reversals

Although I was going to start today's blog talking about chart patterns, I thought it would be fitting to talk about a technical indicator called bullish reversals. A bullish reversal is when a market or stock, (in today's case the broad market) makes a trend reversal in the day. Today for most of the trading day the market couldn't sink fast enough. Then in the last hour of trading the market crept back from its 2.6% loss on the Nasdaq to close down slightly less than 1%.

This shift in momentum in the market signals there are buyers out there, and more buyers than sellers who are adding to their positions. Whenever you see a stock or market slip, and close the day in the top 75% of the price action, you are seeing a bullish reversal, which warrants your attention to start building your watch list based on our 7 steps of buying.