The stock market moves in two general directions…

Markets either move up and down or sideways. So when the markets move up or down, it’s called a trending market. And when the markets move sideways (or reverse back), it’s called a reversion trade. 

It’s really that simple. 

But how can you tell when the market is overextended and due for a pullback? Let us show you one simple trick we use to know if and when the market will retrace some of its movement.