The stock price is at a low level, and suddenly there is the illusion of a downward breakthrough, such as breaking through the support of the long-term moving average, accompanied by all kinds of bad news. Many investors panic to sell their stocks for fear of another market crash. Subsequently, the market rose instead of falling, and a bull market began again. The stock price rose, the transaction was enlarged, and the stock index broke through the important resistance line. At this time, we can regard the downward breakthrough trend as a trap to lure short sellers, that is, bear trap. Those investors who clear their positions at low points or dare not make up their positions have become the victims of the bear market trap, thus stepping out of a round of market.
Similarly, the bull market trap means that when the stock price or index keeps hitting record highs and the market is optimistic, many small and medium-sized investors, especially those who never care about stocks, also start to buy stocks in large quantities. At this time, the stock price or stock index does not rise but falls, and all investors chasing high prices are trapped in the "trap", which is the so-called long trap.
The discrimination of bear market trap is mainly from the aspects of fundamentals, technology and market psychology.
From the macro-fundamental analysis. It is necessary to understand the policy factors and macro-fundamental factors that fundamentally affect the market, and analyze whether there are substantial negative factors. If there is no particularly substantial short-selling factor under the policy background, or the negative factors have been basically exhausted, it is easier to form a bear trap, because the market has fallen too much and the policy has been blowing warm air, but the stock price has continued to plummet. From the technical form analysis. If the market is not broken, it will not stand. The K-line trend of the bear market trap is often manifested as a series of long yinxian plunging, which runs through all kinds of strong support levels, sometimes even accompanied by a downward gap, causing a chain reaction of market panic, which makes investors mistakenly think that there is huge room for decline in the market outlook and throw out their stocks one after another, so that the main force can undertake a large number of cheap stocks at a low level. In terms of technical indicators, bear trap will lead to serious deviation of technical indicators, and it is not a deviation of one or two indicators, but often a synchronous deviation of multiple indicators for multiple periods.
From the analysis of market psychology. Due to the long-term decline of the stock market, a heavy lock will be formed in the market, many investors will complain and sigh, and their popularity will be exhausted in the quilt. But it is often at the moment when the market sentiment is extremely depressed, which just shows that the stock market is not far from the real bottom.
From the analysis of volume. The trading volume of the bear market trap is characterized by the fact that with the continuous decline of the stock price, the volume can always be in an irregular contraction state, and sometimes there will even be infinite empty decline or infinite plunge on the disk, and the trading of individual stocks is also very inactive, which creates an atmosphere of gloomy trend for investors in the foreseeable future. It is in this pessimistic atmosphere that the main force can easily build positions on dips, thus forming bear trap.
Investors can also combine news analysis. The main funds often use the advantages of propaganda to create a short atmosphere. Therefore, when the market is bearish and the stock price or stock index continues to fall, investors should be extra careful.