(Article posted on my blog today )
As per the Dow Theory (relating to Technical Analysis) Bull Markets and Bear markets have three phases. You will find a somewhat detailed discussion on this in the Indian context on Page no. 37 of my book.
Since July 2007 (a year back), while explaining the Dow Theory , I have been indicating to the participants of my workshops that , at that time, we were nearing the last phase of the Bull market characterized by extremely high retail participation.
More recently, after the Jan 08 crash, I was again suggesting to the participants that the first phase of the bear market seems to have started which should be followed in subsequent months by a deterioration of the fundamentals. In the ensuing months we did see economic and corporate fundamentals weaken- lower profits, slowdown, rising inflation, crude oil et al.
I presume we are currently in the second phase of the bear market which may still last some more weeks before the Phase 3 starts.
IN THE ATTACHED CHART , I have tried to mark the phases of the bear market on the Nifty chart though it may not be too accurate in terms of time. I presume the H & S pattern on the Nifty / Sensex and its subsequent violation of the neckline , is only further validating that we are about to enter the phase three in the coming weeks.
Prices tell you more about the future than Annual reports
All of you .Fasten your seat belts !
CA Rajiv D Khatlawala
As per the Dow Theory (relating to Technical Analysis) Bull Markets and Bear markets have three phases. You will find a somewhat detailed discussion on this in the Indian context on Page no. 37 of my book.
Since July 2007 (a year back), while explaining the Dow Theory , I have been indicating to the participants of my workshops that , at that time, we were nearing the last phase of the Bull market characterized by extremely high retail participation.
More recently, after the Jan 08 crash, I was again suggesting to the participants that the first phase of the bear market seems to have started which should be followed in subsequent months by a deterioration of the fundamentals. In the ensuing months we did see economic and corporate fundamentals weaken- lower profits, slowdown, rising inflation, crude oil et al.
I presume we are currently in the second phase of the bear market which may still last some more weeks before the Phase 3 starts.
IN THE ATTACHED CHART , I have tried to mark the phases of the bear market on the Nifty chart though it may not be too accurate in terms of time. I presume the H & S pattern on the Nifty / Sensex and its subsequent violation of the neckline , is only further validating that we are about to enter the phase three in the coming weeks.
Prices tell you more about the future than Annual reports
All of you .Fasten your seat belts !
CA Rajiv D Khatlawala
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