When market has been sliding almost every day, it is now time to sit back and have a broader look at where we are going.
All those who are familiar with candle stick charting methods,
will be aware of the basic concept of 'higher tops - higher bottoms'. A strong trend is said to be in place when higher tops and higher bottoms are formed on successive candlesticks.
On a 'yearly basis', we have seen exactly this happening ever since this bull run started in 2003. The high of every subsequent year was higher than the previous year and the low of every successive year was also higher than the previous year. This year too, the high made in January was higher than the high in 2007.
What happened after that is known to all. Now, we are precariously close to the low of 2007, which was 3554, and 12316 on BSE Sensitive Index.
Today's lows are within striking distance from these lows of 2007. I am not trying to suggest that the long term bull run is in danger. Not at all.
However, it is a well known fact that strong trend of higher-tops-higher-bottoms is broken when a previous low is breached. When this happens, it takes quite a while (a few bars - years), for the last high to be crossed.
Thus, if the index goes below 12316 and nifty goes below 3554, I don't think we will see the January highs being crossed at least for the next couple of years.
It must be mentioned here, that almost 2/3rds of the individual stocks have made lows lower than those of 2007 (in my opinion, 52-week low is misleading).
As regards international markets, most of the major markets - DOW, NASDAQ, NIKKEI, FTSE have gone below 2007 lows.
The million dollar question now is, whether we can protect 12316 on the index and 3554 on the nifty.
I am not trying to suggest that if the above levels on Nifty are broken, we will keep going down and down.
The only point is, if Nifty goes below this level, we can forget about a new high for the next few years, (unless, nifty rockets up to a new high in the last 5 months in 2008 - highly unlikely!!) and market will need to consolidate.
All those who are familiar with candle stick charting methods,
will be aware of the basic concept of 'higher tops - higher bottoms'. A strong trend is said to be in place when higher tops and higher bottoms are formed on successive candlesticks.
On a 'yearly basis', we have seen exactly this happening ever since this bull run started in 2003. The high of every subsequent year was higher than the previous year and the low of every successive year was also higher than the previous year. This year too, the high made in January was higher than the high in 2007.
What happened after that is known to all. Now, we are precariously close to the low of 2007, which was 3554, and 12316 on BSE Sensitive Index.
Today's lows are within striking distance from these lows of 2007. I am not trying to suggest that the long term bull run is in danger. Not at all.
However, it is a well known fact that strong trend of higher-tops-higher-bottoms is broken when a previous low is breached. When this happens, it takes quite a while (a few bars - years), for the last high to be crossed.
Thus, if the index goes below 12316 and nifty goes below 3554, I don't think we will see the January highs being crossed at least for the next couple of years.
It must be mentioned here, that almost 2/3rds of the individual stocks have made lows lower than those of 2007 (in my opinion, 52-week low is misleading).
As regards international markets, most of the major markets - DOW, NASDAQ, NIKKEI, FTSE have gone below 2007 lows.
The million dollar question now is, whether we can protect 12316 on the index and 3554 on the nifty.
I am not trying to suggest that if the above levels on Nifty are broken, we will keep going down and down.
The only point is, if Nifty goes below this level, we can forget about a new high for the next few years, (unless, nifty rockets up to a new high in the last 5 months in 2008 - highly unlikely!!) and market will need to consolidate.
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