Is the first push a buy? 《East Asia Economic Online column currently featured》

Good morning, this is Matsushita.

Yesterday's NY Dow closed lower,

marking a red candlestick for the first time in 7 days.

The USD/JPY continued to rise, in the mid-107s.

NY Gold continued to fall.

There is a market proverb that says,

"The first pullback is a buying opportunity."

In an upward market, the first point where it drops

is a sign of a buying opportunity.

Yesterday's NY Dow, after six trading days with gains since the Feb 9 low,

showed a rise with a bullish candle,

and for the first time fell on a bearish candle,

so it could be considered a kind of “first pullback.”

Similarly, the Nikkei Stock Average also,

after hitting a low on Feb 14, rose for three days with bullish candles,

and yesterday broke the previous day's low with the first bearish candle.

In light of yesterday's moves in the NY Dow,

if today's Nikkei Average falls,

this may also be a first pullback.

What do you think?

Is this a perfect buying opportunity?

When I write this question,

almost always,

I receive questions like,

"What do you think, Matsushita?"

As I always write in my newsletters and teach in seminars and schools,

there is no absolute answer or correct value in the market.

There are only choices and the probabilities associated with them.

Please revisit the meaning of the proverb I wrote first.

It says, "In an upward market～～."

Here you could rewrite it as, "In an uptrend,～～."

If the current NY Dow is forming an uptrend since Feb 9,

this drop point could be a buying opportunity.

Similarly, if the current Nikkei Average is forming an uptrend since Feb 14,

this could be a buying opportunity as well.

You should consider how you view movements from the most recent lows and

future price action,

and whether you consider this decline a buying opportunity

or not.

As a second proverb,

there is also, "The initial retracement is a selling point."

This means the exact opposite of the previous proverb.

If in NY Dow, the market has been forming a downtrend since Jan 26,

and the rise since Feb 9 was merely a retracement,

then this would be a selling opportunity.

The same applies to the Nikkei Average.

In the market, there are always buyers and sellers for the same stock and price.

That is why trades occur and prices are determined.

When you trade,

imagine what the people who are on the other side of the trade are thinking.

If you can anticipate their actions,

you will reduce the chances of confusion when the market moves against your expectations.

If this becomes the first pullback and prices rise again,

that would be good.