$Tiger Brokers(TIGR)$ Here is a structured way to judge whether a real market crash has arrived and how to identify a potential bottom, grounded in indicators that professional investors watch closely.
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How to judge if a true market crash has begun
A full-blown crash usually shows three layers of deterioration happening at the same time:
1. Macro deterioration
Rapid tightening of financial conditions.
Major shift in central bank tone toward higher-for-longer rates.
Credit spreads widening, especially in high-yield.
Signs of stress in funding markets or liquidity.
When macro and liquidity both weaken, selling becomes broad and persistent, not just sector-specific.
2. Market structure breakdown
Indexes break multiple long-term supports (50-day and 200-day moving averages).
New lows exceed new highs for many consecutive days.
Volatility index spikes sharply and remains elevated.
Correlations across assets move toward one, indicating panic.
It is the combination of broken technical structures and rising volatility that signals a possible crash.
3. Behavioural signs of panic
Capitulation in retail and leveraged traders.
Forced liquidations in derivatives, especially large open interest unwinds.
Extreme outflows from funds that usually hold steady.
A market crash is not just falling prices. It is when selling becomes indiscriminate, liquidity disappears and fear overrides logic.
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Indicators that help with bottom-fishing
No single indicator is perfect, but several together increase accuracy.
1. Volatility and fear indicators
VIX reaching extreme levels has historically coincided with bottoms.
Put-call ratios above one indicate hedging panic.
Funding rates in futures turning deeply negative show aggressive shorting exhaustion.
When fear hits extremes, selling becomes unsustainable.
2. Breadth exhaustion
When more than 90 percent of index constituents fall together, markets often near a turning point.
A rebound led by stronger breadth usually confirms a bottom.
Bottoms rarely form when only a handful of large caps move.
3. Liquidity turning point
Watch when:
Treasury yields stop rising.
USD softens after a surge.
Money market flows peak and begin to reverse.
These signal that selling pressure may be fading.
4. Capitulation signals
Very high trading volume days.
Sharp intraday recoveries from deep lows.
Large hedge funds or institutions covering shorts.
Capitulation does not happen quietly; it is violent and emotional.
5. Macro stabilisation
A market bottom tends to form when macro indicators stop worsening, even before they improve. Examples:
Inflation stops rising.
Jobs data stops surprising to the downside.
Rate expectations stabilise.
Markets turn before the economy turns.
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How experienced investors bottom-fish
Professionals rarely try to catch the exact low. Instead, they:
Enter in stages rather than all at once.
Use oversold indicators to identify favourable zones.
Focus on high-quality assets first.
Look for confirmation signals, not blind guesses.
Bottom-fishing is about managing probability, not predicting perfection.
Disclaimer: Investing carries risk. This is not financial advice. The above content should not be regarded as an offer, recommendation, or solicitation on acquiring or disposing of any financial products, any associated discussions, comments, or posts by author or other users should not be considered as such either. It is solely for general information purpose only, which does not consider your own investment objectives, financial situations or needs. TTM assumes no responsibility or warranty for the accuracy and completeness of the information, investors should do their own research and may seek professional advice before investing.
