The process of learning to invest and trade can be daunting at first. For many of us, it starts out as a search for the holy grail. Book to book, indicator to indicator, guru to guru – you are always just one step away from trading Nirvana. It is not unlike a search for the pot of gold at the end of the rainbow. And yes, mischievous little Leprechauns are everywhere.

For most of us starting out, the answers had better come quickly because our capital is rapidly disappearing. And if you are anything like me, it is not likely the first round of capital on the journey. There is no experience that compares to being forced into margin liquidation. Tuition – as we affectionately reference it. I have been there more than once on my journey – and we will leave it at that.

One complication of the learning process, however, is that your head can be stuffed full of minutia. The next thing you know, you overlook the obvious – the signal buried in the noise.

In the trading world, everything starts with price action. The rest – no matter what it might be or the claims of promoters – is context. The price is doing x, but momentum is waning. Momentum is context. The price is potentially peaking on the nominal 18-month cycle. The cycle is context. Obviously, context can be ranked in its level of importance but that is a discussion for another day.

Periodically, I will strip everything off my charts and just look at price and price alone. Price is the signal – the rest is noise. First I look at the line chart, then a bar chart, and then a candlestick chart. Sometimes I turn the chart upside down just to trick all my biases. Then I add in some volume. For these purposes, I keep it simple.

Over the past year, with the most aggressive Fed action I have experienced in my career, dips (when they occurred) lasted barely a nanosecond. We have seen a lot of “V” bottoms. V bottoms are the exception. The important pivot lows normally involve a two-step process. The market puts in a low, then retests it about a week later. The safest entry is on the retest.

There is no retest on a “V” bottom. Instead, the price just touches and goes – hence the “V.” You end up waiting for the retest with your hat in hand. Any hesitation and the market has already left you in the dust.

If you ignore all the noise, we just experienced the kind of bottom as they used to be. Likely, this will be more to the norm as we carry on from the giddiness of liquidity, Fed-driven markets. So it would be wise to add this one to your notebook.

So let’s examine this bottom in simple terms: