Chart courtesy of StockCharts.com
Chart courtesy of StockCharts.com
  1. The price drops below the 200 day simple moving average. This is your first warning on the long side to exit and wait for the 200 day to be retaken.
  2. The MACD has a bearish crossover. This shows that the uptrend has lost momentum. This is a warning sign that the market could fall as price settles out of an uptrend and into a trading range.
  3. The VIX starts to go over 20 and stay there.
  4. Price starts to trade under the 5 day EMA.
  5. The 10 day EMA starts to be intraday resistance.
  6. Even strong rallies fail at the 21 day EMA.
  7. Consistent lower highs and lower lows.
  8. The average true range (ATR) increases with volatility during downtrends.
  9. Down volume days are higher than up volume days.
  10. Most of your long side positions start to lose money consistently and you find yourself profitable selling short not only rallies but dips.