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  #41  
Old 1st August 2008, 11:36 AM
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I will wait for Bear Flag to Crack and then put my Short! or will do it near the downward upper channel trendline
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  #42  
Old 1st August 2008, 06:10 PM
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Originally Posted by rishig View Post
Alchemist, what is your take now as neither 4200 held and nifty closed in red with huge fresh shorts? What is your take now and also considering the falling crude prices and good up move in US markets?
I had suggested that a compulsive trader can go long at 4210 with stop-loss of 4140.

Nifty made a low of 4159 on 29th July and re-started its rally.

I won't go long in a bear market, but somehow I get the feeling that this rally may take Nifty all the way to its 200 day EMA.

(200 day EMA is at 4750 right now).

Crude oil is looking bearish and may go down to its 200 day EMA ($111.25 today, but rising).

I have mentioned this earlier too - Indian markets are at mercy of crude oil now...all other factors are secondary.

I am looking to short the market, but I want a better risk-reward ratio.... I will wait at least till 4700.
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  #43  
Old 2nd August 2008, 10:38 AM
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alchemist, do you still think this is just a bear market rally and not really start of an uptrend? Would it still remain a bear market if the crude falls to $100? And, if it would still remain a bear market, then how long do you think would it take to come out of the bearishness and move to a bullish trend?
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  #44  
Old 4th August 2008, 10:21 AM
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Originally Posted by rishig View Post
alchemist, do you still think this is just a bear market rally and not really start of an uptrend? Would it still remain a bear market if the crude falls to $100? And, if it would still remain a bear market, then how long do you think would it take to come out of the bearishness and move to a bullish trend?
Yes, I don't really feel this is a bull market.

Crude going to $100 isn't going to make much a difference. We need oil to stay at $100 (or below) for the long-term. If oil bounces back from $100-$105 and resumes its bull run, we gain nothing.

My feeling is that we will see one more selling phase, which fortunately may form a long-term bottom.

On the Sensex, I expect markets to go back to 12500, which was the bottom made in July. If we are lucky and oil prices remain subdued for some time, we may make a double bottom at around 12000-12500.

Corresponding levels for the Nifty will be 3600-3800.

For 12000 to break, we will need a strong spike in crude oil....$145+.
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  #45  
Old 6th August 2008, 10:41 AM
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alchemist, I plan on shorting around 4700 level again. Do you think it is a good level to short as sometimes nifty doesn't exactly touch its 200 day EMA which is around 4750? or should I wait till it hits 4800 level? and what should the stop loss be in this case?
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  #46  
Old 6th August 2008, 11:02 AM
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i know that i can't think like alchemist but my suggestion is NO

current rally can goto 4900 even to stiff resistance of 5100 chances are 70:30.

generally in a bear market rally can goto 35-40% what is happening now.

and if it goes beyond this level(5100) signs a bull market rally

Last edited by ramkasi : 6th August 2008 at 11:18 AM. Reason: adding few more words
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  #47  
Old 7th August 2008, 01:34 AM
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I see a grave Stone Doji! It has bearish implications and close is exact at trendline. I will wait for Flag to broke before i put my short
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  #48  
Old 7th August 2008, 08:57 AM
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man, help me understand this flag concept. When you say you will wait for the flag to break, what do you mean by that, I mean what values are we talking about here? How did you arrive to a conclusion that this is a bearish sign? Your clarification would be much appreciated. Thanks!
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  #49  
Old 7th August 2008, 09:40 AM
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Quote:
Originally Posted by rishig View Post
alchemist, I plan on shorting around 4700 level again. Do you think it is a good level to short as sometimes nifty doesn't exactly touch its 200 day EMA which is around 4750? or should I wait till it hits 4800 level? and what should the stop loss be in this case?
Quote:
Originally Posted by ramkasi View Post
i know that i can't think like alchemist but my suggestion is NO

current rally can goto 4900 even to stiff resistance of 5100 chances are 70:30.

generally in a bear market rally can goto 35-40% what is happening now.

and if it goes beyond this level(5100) signs a bull market rally
Actually we have a very rare situation right now.

Usually when an index or stock is in a bear market and starts a strong corrective up-move, it finds resistance near the 200 day moving average.

Most of the time the simple and exponential moving averages are close to each other.....usually the difference is 2% or less.

However, currently the 200-day simple moving average is higher than the 200-day exponential moving average by 8%.

Current 200-day simple moving average = 5113.
Current 200-day exponential moving average = 4742.

The 8% difference is the highest ever for the Nifty.

Nifty came into existence in 1994.

If we look at the Sensex, such a huge difference was seen last in 1993.

The reason for this huge difference is that the indices are now correcting after a long bull market. (Nifty has never seen such a bull market in the past).

The Sensex had witnessed a bull market similar to 2003-2008 bull market in the 1988-1992 period.

When markets correct after a long bull market, the prices fall sharply and its a unidirectional move. The exponential moving average gives more weightage to recent data and thus falls much faster than the simple moving average.

Hence the moving averages diverge sharply.

Many traders use the 200-day EMA and others use the 200-day SMA.

To me, it seems unlikely that markets will go beyond 4750, but then I am not 100% sure.

If fact, after yesterday's sell-off from the top, I doubt if we will get 4700 to short.....

If possible, I suggest using the Mini-Nifty to short the markets around 4700 and then averaging out if 5100 comes. This would mean an average shorting level of 4900.





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  #50  
Old 7th August 2008, 11:09 AM
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Alchemist, thanks for the clarifications. Another question - Why would you recommend shorting Mini Nifty futures instead of Nifty futures? Any specific reason behind it?
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  #51  
Old 7th August 2008, 11:53 AM
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Quote:
Originally Posted by rishig View Post
Alchemist, thanks for the clarifications. Another question - Why would you recommend shorting Mini Nifty futures instead of Nifty futures? Any specific reason behind it?
I suggested it as an alternative.

Not everyone has the margins to play with multiple Nifty futures.

Lets say an investor has margin only enough for 1 Nifty futures lot. If he is confused whether to short at 4700 or at 5100, he can short at both levels if by shorting the Mini-Nifty.

If he shorts big Nifty at 4700 and the market goes to 5100, he will have a huge MTM loss.

If he doesn't short at 4700 (waiting for 5100) and markets just do down from here, he will have no position and thus no profits.

====================================

Using Mini-Nifty not only allows an investor to take small positions, it also means that he can book partial profits/losses as markets move.
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  #52  
Old 7th August 2008, 01:37 PM
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Within main downward Channel marked by Bold Gray Lines.

Do you see at angle light Grey Lines, drawn between July and August? That is Bear Flag(minor Channel) or Corrective rise!.

Once that is broken, I will put my short (this is just one of technique's I use)!

Also you can check similar action in month March to May. Once channel was broken(wait for confimed close)!, put a short!
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  #53  
Old 7th August 2008, 03:23 PM
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Alchemist, are there any other instances in the world markets (like Dow Jones or any other) where during the bear rally after an extended bull run, the averages (Simple and Exponential) diverged so much? If yes, what happened in that case; i.e did it fall back after the Exponential or go as high as the Simple and then retreated?
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  #54  
Old 8th August 2008, 09:39 AM
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Originally Posted by rishig View Post
Alchemist, are there any other instances in the world markets (like Dow Jones or any other) where during the bear rally after an extended bull run, the averages (Simple and Exponential) diverged so much? If yes, what happened in that case; i.e did it fall back after the Exponential or go as high as the Simple and then retreated?
I have DJIA data from 1990.

In last 18 years, the two moving averages for DJIA have never been apart more than 4%.

For the Shanghai Composite, the two moving averages were 20% apart in end-June. The two averages are still apart 17%.

In the chart below (Shanghai Composite), the yellow ribbon is the 200-day simple moving average and red ribbon is the 200-day exponential moving average.

The point to note here is that the difference arises because of the way the two moving averages are calculated.

SMA gives equal weightage to all 200 days.
EMA gives more weightage to more recent days.

So in any stock/index, where the recent prices are much lower/higher than the prices a few months ago, the two moving averages will be far apart.

I couldn't find any correlation between the divergence of the two MA's and overall trends of the indices.

I guess divergence of SMA and EMA isn't of much practical importance.

The two are sometimes far-apart and traders must keep that in mind while anticipating market turning points.

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  #55  
Old 11th August 2008, 11:15 AM
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i think the following factors can take the market to that level

1.rapidly falling crude .
2.fed decision to not to inc the rate.
3.one of OPEC country says to inc 30% production in next 2 years.
4.fii's u-turn(from net sellers to net buyers).
5.political uncertainty is over for now though the elections are inevitable in next 8 months.
6.inflation at very near to it's peak and is the only major factor for rbi
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  #56  
Old 11th August 2008, 12:56 PM
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i cant edit the post so i am writing here the 7th point

7.this weeks meeting of sebi may take some favorable decisions to fii's

disclaimer: these are may have factored in already.and are my personal views only and are based on news only.

Last edited by ramkasi : 11th August 2008 at 12:58 PM.
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  #57  
Old 11th August 2008, 04:06 PM
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alchemist, I feel the nifty is an overbought situation now..do you seem a time to short is approaching us?
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  #58  
Old 11th August 2008, 06:38 PM
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I also see a Dark Cloud pattern forming..tomorrow should confirm the pattern and day after should confirm the bearishness..your inputs?
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  #59  
Old 12th August 2008, 01:07 PM
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Here is the trade that I made today:

Mini-Nifty August Futures: 4624
Type: Short Sell
Qty: 40

When should I cover or should I just let it run?
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  #60  
Old 13th August 2008, 09:45 AM
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Quote:
Originally Posted by rishig View Post
alchemist, I feel the nifty is an overbought situation now..do you seem a time to short is approaching us?
A bit overbought.

However, the main point is that beyond 4600, there isn't much buying interest.

Quote:
Originally Posted by rishig View Post
Here is the trade that I made today:

Mini-Nifty August Futures: 4624
Type: Short Sell
Qty: 40

When should I cover or should I just let it run?
Depends on your risk-taking capacity.

In the 4400-4450 range, there is support of 21 EMA and 50 EMA.

On the upside, there is resistance at 4730 (200 EMA).

You may cover around 4460. (You will get 4500 on opening today.)

If you want to play for a bigger move, you can keep a stop-loss around 4760 and play for 300 point down move.
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  #61  
Old 13th August 2008, 11:58 AM
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means he will get rs 300*40=12000 am i correct?
how many times one can rollover in f&o.can u plz tell here?
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  #62  
Old 13th August 2008, 06:07 PM
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Originally Posted by ramkasi View Post
means he will get rs 300*40=12000 am i correct?
how many times one can rollover in f&o.can u plz tell here?
Nifty futures size is 50 and Mini-Nifty futures size is 20.

Depending upon which futures he shorted, the profit will be Rs 15000 or Rs 6000.

One can rollover as many times as he wants.
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  #63  
Old 13th August 2008, 10:00 PM
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alchemist, I think we definitely have bearish reversal and the flag would also break tomorrow if US markets remain down..What do you suggest?

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  #64  
Old 14th August 2008, 08:49 AM
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Originally Posted by rishig View Post
alchemist, I think we definitely have bearish reversal and the flag would also break tomorrow if US markets remain down..What do you suggest?
It is something like the dark cloud cover, but not exactly.

===============================

For a perfect dark cloud cover, there has to be an opening-gap.

This means day 2's opening price should be above day 1's high.

The creates a panic among the shorts and they cover when the gap closes.

However. the selling continues even after the shorts have covered and prices end much lower than the opening price.

This is how a "dark cloud cover" is formed.

===============================

Still, as I said earlier, I am overall bearish at these levels.

200 day EMA isn't far away (4732) and I think it will act as a very strong resistance.

On the downside 4400-4450 range is good support. If this level breaks, then bulls will panic.
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  #65  
Old 14th August 2008, 09:16 AM
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I would like to add something.

It will be actually very difficult to find a gap-up or gap-down opening in Nifty.

I don't know how exactly it is calculated, but Nifty's opening rate is always close to previous day's close.

Thus one can find many gaps in Sensex, but there is rarely any in Nifty's charts.

See the Sensex chart for last few days. There are been so many up and down gaps.

If you see the Nifty chart for the corresponding period, you won't see a single gap.

Note: The Sensex actually is showing a "bearish engulfing" pattern.

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  #66  
Old 17th August 2008, 12:47 PM
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alchemist, what do you think would happen on monday keeping in mind the US markets closed in positive on thursday and friday..should we hold on to our short positions or look to close them?
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  #67  
Old 17th August 2008, 05:33 PM
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Originally Posted by rishig View Post
alchemist, what do you think would happen on monday keeping in mind the US markets closed in positive on thursday and friday..should we hold on to our short positions or look to close them?
As I said it all depends on how much risk you want to take.

================================

If you are happy with small profits, close the position.

Short again
if you get 4700
or
if if 4390 breaks.

================================

or keep a stop-loss of 4760 and keep holding the short-position.

below 4400, Nifty may go and test 4200.
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  #68  
Old 18th August 2008, 08:26 PM
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On broader picture, we have reached our targets as mentioned in this post

NSE Nifty - Technical Analysis

The Shoulder target of 3750-3800 range is achieved!

Will we see Head target 3000+- Levels?
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  #69  
Old 18th August 2008, 11:34 PM
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Here comes the chart

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  #70  
Old 20th August 2008, 08:09 PM
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Alchemist, what is your opinion..I am getting different analysis on daily, weekly and monthly on Spot as well as Future technicals...are you still bullish or we might see resume of this bear market rally towards 4700 levels?
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  #71  
Old 20th August 2008, 10:34 PM
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Originally Posted by rishig View Post
Alchemist, what is your opinion..I am getting different analysis on daily, weekly and monthly on Spot as well as Future technicals...are you still bullish or we might see resume of this bear market rally towards 4700 levels?
There is absolutely no buying interest in this market.

Volumes are pathetic.

I have been observing this for last few days. Many stocks on the NSE have 1%-2% spreads (difference between best buy and best sell order).

Look at the chart below.

The trading volumes in Nifty are as low as in February.

I have a feeling that this is just a lull before the storm and the market will soon make a violent move on either side.

The possibility of a downside breakdown seems more to me.

If you are still short, keep a stop loss of 4460 or whatever suits you.

You can short again at the 200 day EMA with 30-40 point stop loss.

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  #72  
Old 21st August 2008, 09:25 PM
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alchemist, thank you for your inputs..what do you think this sudden rise in crude prices would have on nifty..do you think this crude rally has enough strength to go back and touch its previous highs?
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  #73  
Old 22nd August 2008, 09:00 AM
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Quote:
Originally Posted by rishig View Post
alchemist, thank you for your inputs..what do you think this sudden rise in crude prices would have on nifty..do you think this crude rally has enough strength to go back and touch its previous highs?
I think crude oil will consolidate a bit more before its bull market resumes.

This may even mean a further correction in oil.

I don't invest in crude oil. I invest in stocks.

My view on Indian stocks with crude oil above $100 is bearish - it doesn't matter if crude is at $110 or $120 or $150.

My view is still the same.

There still will be one last corrective down-move in the Indian markets before a bottom is formed.

Higher crude oil goes, deeper will be the correction in stocks.
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  #74  
Old 24th August 2008, 10:45 PM
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As suggested by Alchemist Last corrective will happen, but is yet to start



Down move started with break of Bear Flag, but Mr. ADX is still not raising its head above 20.
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Old 2nd September 2008, 01:41 PM
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hello man crude bubble burst to below 107$.what the charts saying could be next target of 95$

will it take market to 4850 on nifty i two weeks.could u please give here your opinion?

ram.
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Old 2nd September 2008, 01:41 PM
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hello man crude bubble burst to below 107$. what the charts saying could be next target of 95$?

will it take market to 4850 on nifty i two weeks.could u please give here your opinion?

ram.
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  #77  
Old 2nd September 2008, 04:48 PM
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Alchemist, after today's rally, do you think it could be end of this bear phase or is it nothing more than a temporary rally and we should look to short at higher levels again? And if we should short, what levels should we short at and what would be the appropriate SL?
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Old 2nd September 2008, 06:25 PM
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Quote:
Originally Posted by ramkasi View Post
hello man crude bubble burst to below 107$. what the charts saying could be next target of 95$?

will it take market to 4850 on nifty i two weeks.could u please give here your opinion?

ram.
See the thread on technical analysis of crude oil.

If oil falls to $90-$100, OPEC is most likely to cut production.

Even after the production cut, if oil prices keep falling, I would say that it was just a bubble, which burst.

Quote:
Originally Posted by rishig View Post
Alchemist, after today's rally, do you think it could be end of this bear phase or is it nothing more than a temporary rally and we should look to short at higher levels again? And if we should short, what levels should we short at and what would be the appropriate SL?
Currently Nifty has resistance at

200 day EMA = 4685
200 day SMA = 4999

If the market is able to cross both levels, then we can say that the bear market is over.

I will be looking to short again at levels around 4960 with a stop loss of 5060.

(If markets see selling pressure near the 200 day EMA, I may even short at levels around 4650).

A lot depends on how crude oil behaves in next few weeks, so making long-term predictions is futile.
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Old 10th September 2008, 10:21 PM
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Alchemist, the market seems to be stuck in a trading range of 4400 to 4550...the NSG waiver is done and over with...Crude is down to $102/barrel..OPEC is cutting crude production in half...

now do you see a fall or a rise in the markets in the short term - week to a month basis?

I am currently short around 4440 level...but don't know whether I should hold these shorts or go long? Ive lost plenty of money within the last few days as Nifty is getting extremely difficult to trade...
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Old 10th September 2008, 11:47 PM
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Default The Mirage of bear Run

Every Time market rises a bit and we become bullish! but there is much more to it.

Let me present here the 15 years of nifty Monthly charts to understand why we should not be bullish so early!

Nifty Analysis from Long term View

Year 1999-2000 Bull Run

This is the nice earlier bull run after which technology stocks got beating and known in history as Tech Bubble!




Year 2000- 2002 Bear Run & Consolidation

This is the period when we broke the up trend line and enter into bear phase and technology bubble got busted!

Also note the green candles , which are the months where we did some bear market rallies to form a downward channel!



Year 2002 - 2008 Bull Run

Then we again broke the downward channel to signal bottom and we started the Up Run!



Year 2008 to current start of Bear run

Now you see that these green candles are actually monthly rises within a down trend! So Watch before you go in buy and become over bullish!

First Black Big candle is Jan 2008 and you can count rest next!

Also note the Fibonacci levels of total bull rally. We haven't even yet corrected 50 %.



I hope message is clear enough! We are in difficult bear market!
------------------------------------------------

Last edited by man4urheart : 10th September 2008 at 11:59 PM.
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