Everyone wanted the bottom's exact number. I wanted a higher high.
Trend Comes Before Prediction
I never catch the low. I write down what the turn has to look like, and catch the trend instead.
Act on conditions you can check, not forecasts you must defend.
Do not call the turn. Write down what the turn has to look like, and let the market draw it.
Story
“People are expecting 3200-3300 for S&P. I am not sure. For trend change it should form a higher high first.. 2-3 weekly close above 4200 would change sentiments and trend reversal.”
This is a note I wrote to myself on December 30, 2022, in the dead center of the bear-market gloom. I dug it back up because it captures the one habit that has saved me more money than any forecast ever made me. I am not a price-target investor. I am just someone who has spent two decades watching crowds fall in love with a number while the market takes its time. So instead of guessing where the pain would end, I wrote down what the end would have to look like before I would believe it.
At the close of 2022 the whole conversation was a bidding war over the bottom. Everyone had a number: 3,200, 3,300, surely lower, the recession is coming. I refused to name one. I wrote a condition instead.
The S&P had to form a higher high first, and I wanted two or three weekly closes above roughly 4,200 before I would call the trend changed. The part of that note that still makes me smile is that the lows people were waiting for never came. The market had quietly bottomed in October, around 3,577, while everyone stared down at their target. Through January and into February 2023 the weekly closes stacked above 4,000, then cleared 4,200 and held.
By the time my condition was satisfied, the new bull was already running. The forecasters were another story. Many were still short, still waiting for their exact print, watching the rally from the sidelines and calling it a bear-market bounce. A forecast asks me to be right.
A condition asks the market to prove itself. I did not catch the low. I never do. But I caught the trend, which is the part you can actually act on.
Meaning
Plain English
Weekly close is simply where a price finishes on Friday. Using it filters out the random wiggles inside a week so you only react to moves that actually stuck. A higher high is a peak above the last peak, and a higher low is a dip that stops above the previous dip.
Stack those and you have an uptrend (the reverse is a downtrend). A range is the sideways drift in between, where price is not trending either way and patience usually beats action.
A simple moving-average road map. Moving averages are lines that smooth out price so a trend is easier to see. Three are enough as reference points: the 20-day shows short-term momentum, the 50-day shows whether the trend is still being defended, and the 200-day shows whether the larger trend is being tested. Do not treat these lines as magic. They only help you see how serious a move is.
Framework
Write the trend change as a condition decided in advance, then wait for the weekly close to confirm it before acting.
- The process: pick one index or stock and write a condition, not a forecast. Do not write "the bottom is 3,300." Write "I will act only after a weekly higher low and two weekly closes above the trigger level."
- Name the structure to trust: higher highs and higher lows lean up, lower highs and lower lows lean down, everything between is a range that owes you nothing.
- Keep that line in front of you so the rule decides, not your mood.
- When one big green day tempts an early entry, hold to the weekly close as the signal and treat a single day as noise.