Market tops are subjective opinions that often quickly become fact, for better or worse. How can you possibly identify a market top? Here are some suggestions that many experts believe will help you identify market tops.

• Closely watch the Dow 30, NASDAQ Composite, and S&P 500 as they increase. Pay particular attention to the volume and the average. At some point, the volume will continue to be strong, but – the average will climb little or even drop. The increase will be less than in the immediate days preceding this condition.
• Market liquidation (selling) takes place for one to three weeks indicating the market has peaked and sales of securities now predominate.
• Track the above noted activity over a four or five day period. This trend often precedes an overall market downturn. Feeding upon itself, as an almost a self-fulfilling prophecy, the “mood” of the market also tends to change, becoming a bit of a bear rather quickly.

Try not to miss these market top indicators. You may lose profits you’ve already achieved. If you have been on a good streak, you don’t want to quickly change from offense to defense if you can avoid doing so. Identifying market tops can be a profitable component to your market strategy in both the short and long term.