When a bear market hits, retail investors either panic-sell or chase whatever obscure stock happens to be slightly green that day. Experienced traders, however, use market downturns to hunt for discounted market leaders using a two-step behavioral filter.
"In a downturn, look for the strongest leaders of the previous bull run that have dropped 30% or more—then wait for one full week of sideways consolidation before buying."
▲ Step 1: Identify former bull leaders down 30%+ · Step 2: Confirm 1 week of sideways base-building
1. Step 1: Filter Former Bull Leaders Down 30% or More
Rather than buying laggards, build a watchlist of the strongest leading stocks from the prior uptrend that have been dragged down 30% or more by broad market fear.
2. Step 2: Wait for One Week of Sideways Consolidation
Never catch a falling knife mid-crash. Wait until the stock stops making new lows and trades sideways for at least a week—signaling that panic selling is exhausted and institutional accumulation has begun.
🎬 Inspiration Source (YouTube Shorts): Profit Detective — Trading Psychology in Bear Markets (Marília Lima)