I feel compelled to post because I want to dispel a myth that seems to propagate here. A lot of you all believe that timing the market is about binary bets where you pick the dead low, go all in, and then sell at the dead high. That's just not how trading or investing works.
The best thing I can say is that it depends on your time horizon and I don't think about all of my money the same way.
Long term accounts are always 50-100%, more like 75%+, invested in quality companies and indexes. I do hedge with puts and I do sell covered calls and sell puts in these accounts when I think the market gets extended one way or the other. I do not trade short in my long term account other than protective puts. I don't own bonds in these accounts anymore either. I add to these accounts constantly. I avoid individual names unless I know they're high quality and can be counted upon like Apple, Goldman, or Exxon.
My short term account I "time the market" primarily with high volatility names and options. The truth is that I trade setups and probabilities with appropriate risk management. It's not degenerate gambling like you guys think. Some of my favorites are UPRO, LABU, and GUSH. I know when I'm entering, why I'm entering, and when I'm selling good or bad.
Buy and hold is for most people. Active trading is for people who can control their emotions. It takes years to master and I tell that to anyone who wants me to teach them.
So now, to the heart of your question, you won't know the market has bottomed until after it has. It's actually probably better to wait for confirmation if you're trying to time it (using your language). I can give you my opinion of good spots to buy and scenarios where I think the probability of upward momentum is high. Do with it as you wish.
This first chart is a monthly chart for the Dow. I know a bunch of posters on this thread are boomers that follow the Dow. So first off, "OK Boomer" and secondly, the Dow will bounce in the 29,000 area. I think that's a good spot to buy for the long term that you can feel good about. If you notice, we are close.
The second chart is a weekly chart of the Dow. When the yellow line crosses the blue line, you can be confident that an uptrend has resumed. Then you want to buy when price touches the blue line. The yellow line is the 10 week moving average and the blue line is the 50 week moving average. These don't cross very often and normally don't stay crossed as long as we have this year. For reference this stayed crossed for 18 months from 2008 - 2009. Cross until bottom was 15 months.
I don't think we are in times that are as severe as 2008, but if you're wanting to catch a bottom, this is how.
You don’t trade for money, you trade for freedom.
