Bear Market - 2008 - Part 1
Global markets are in midst of a severe sell off. We are in a terrible bear market, and the question we need to ask - Is this the repeat of bear market of 2000-2002?The answer is may be YES.There is amazing similarity you can spot on charts between what is happening now and what happened in 2000-2002. The image below is the Nifty weekly chart of 2000-2002 period -
As you can see in the chart above, the 2000-2002 bear market was not only painful in terms of price correction but also time correction. Here are some facts -
* Nifty peaked in Feb 2000
* It then took 8 months for the market to slide to 200 week moving average. The price correction was 36% and it happened between Feb 2000 and October 2000.
* The market then bounced back from 200 week moving average - 20% bounce. This was Oct-Feb period - generally goo d p eriod of equities* The market then tumbled below 200 week moving average in March 2001.
* The market sharply tumbled 30% on break below 200 week moving average.
* Time Correction - It took 29 months for market to recover once market slipped below 200 week ma. It was a painful slow recovery.
* Every rally below 200 week ma got arrested at 200 week ma during those 29 months of recovery.
* The bull market resumed when market finally broke out above 200 week ma in August 2003.
Ironically now, a similar story is getting played out in 2008. FYI - 200 week moving average = 3648. This level also coincides with 50% retracement of bull run from 920 to 6300.
------------------------------------------------
Bear Market - 2008 - Part 2
Let's compare 2000-2002 period with current period of 2008 and what scenarios can play out of it's the exact repeat of 2000-2002 period.
(A)2000-2002 Bear Market (B) 2008 bear market
Assume A as 2002 bear mkt, and B as 2008 bear mkt.
A)Nifty peaked in Feb 2000
B)Nifty peaked in Jan 2008
A)It took 8 months for the market to slide to 200 week moving average (Feb 2000 to October 2000)
B)Nifty is about to touch 200 week ma and it's already 9 months (Jan 2008 - Sep 2008)
A)Price correction to 200 week ma from peak = 36%
B)Price correction to 200 week ma from peak = 42% (not reached to 200 week ma)
A)There was 20% bounce after market touched 200 week ma and it happened during Oct-Feb which is goo d p eriod of equities.
B)May Happen ...It means market may bounce from 3650 to 4500 levels in next 3-4 months...pre- election/ seasonal rally
A)The market then tumbled below 200 week moving average in March 2001.
B) The next wave of correction may come in Feb-March 2009 just before elections and market can slip below 200 week ma
A)The market sharply tumbled 30% on break below 200 week moving average.
B)Quite possible during elections - Nifty can tumble 20 to 30% below 200 week ma
A)Time Correction - It took 29 months for market to recover once market slipped below 200 week ma. It was a painful slow recovery.
B)The real bear market painful period may come in 2009-2010 period and bull market may resume in 2011.
A)The bull market resumed when market finally broke out above 200 week ma
B)200 week ma can be a pivot point for next bull run
It means we may see a strong bounce in next 3-4 months before we see another sharp correction.
Source: Deadpresident blog, StateoftheMarket.net
--------------------------------------------
Other Deadpresident articles:
Oil slips after job report, $700B bailout
Maharashtra Seamless
Q2FY09 Oil Field Services
Jupiter Biosciences
Weekly Wrap - Oct 6 2008
Cement Sector Update
Havells India
Essar Oil
HDIL
Satyam Computer Services
Futures and Options - Oct 4 2008
Lanco Infratech
Banking Sector
Maruti Suzuki
ABB
IT Sector
Reliance Communications
Aban Offshore
TCS
Video - Interview with Warren Buffet
State Bank of India
RBI to Banks - tell us how much you are losing!
Q2FY09 IT Earnings Preview
Q2FY09 Pharma Earnings Preview
Q2FY09 Auto Earnings Preview
More @ http://deadpresident.blogspot.com
This blog is for providing daily news of Corporate Indian Stories, Corporate Results, Equities, MFs, Banking,Insurance, Brokerages Informations, World Business, Venture Capital, Angel Investors, BSchools, MBAs,Jobs, Politics & something Interesting.Our team will be grateful to the owners of various Indian/world/govt sites to refer their sites to get INFORMATION without objection.Request viewers to make verification about the information. Blog is not responsible for any faulty information.
Showing posts with label 2. Show all posts
Showing posts with label 2. Show all posts
04 October 2008
Subscribe to:
Posts (Atom)