Weekly Market Recap

Its is always feel good to see the market going up, but extremely disappointing if you didn’t expect it; as I didn’t expect it to bounce-off as sharply as it did since last Tuesday, 11 Dec (state election outcome day) until last Thursday. However, I had decided that I am not a buyer in this rally that appeared to be sanctimonious to me unless I found veritable evidence to support that rally. As there is an old saying  “patience always pay” and that proved to be true when on last Friday market plummeted sharply, consequently closed the week in negative territory.

The benchmark Sensex ended the week with a loss of 220 points, or .61% to settle at 335742, similarly, Nifty lost 51 points, or .48% and closed at 10754.

Current Outlook

In most of the year 2018, since first correction came in February, until made a new high on 28th, September 2018, the market breadth remained quite weak and I have written about this in my last many blogs. I always consider the market breadth as prominent indicator for the course of identifying the direction of the market particularly for intermediate-term and long-term, but not for very short-term. In simple sense, market breadth should commensurate in direction of and with the market, if not then there is a amiss. As I mentioned in my last blog that the recent unexpected bounce, perhaps, could have been the result of contrarian to negative sentiments, specially at a time when two major events were not favourable for the market, one is election outcome and second RBI governor resignation.

As per my analysis, we were in secular bull market which started in 2013-14, however, provided the behaviour of the market in the year 2018 (including market breadth, differences of net new lows and high, and volatility,etc..) indicates me that secular bull market is over. In fact, I think secular bear market has begun. In my blog dated 25th, November, I stated that I have found similar configuration on charts as we saw in 2008-2009, eventually the correction of over 50% in indices occurred during that year. Based upon that it’s probably going to get worse, but might not be as deep as it was. Hence, I think Outlook is quite weak and negative.

Conclusion

As I have been writing since last few weeks that we are in bear market and I think, things are probably going to turn for the worse soon. It would be finally clear to most people that we are in bear market, and we need to think about what is next. As I can see on monthly charts ,the two big declines in 2000 and 2008 were both more than 50% that lasted 24 months and 18 months respectively. This time if not 50%, but decline up to the year 2015-16 low is quite possible that is 7500 – 9000 level on Nifty. Reaching those levels would require decline of about of 36% and 23% from 2018 top, and it will probably take months to get there. Hence, be cautious and alert…!!

I welcome any feedback you may have about the content of this article.

Keep Analysing & Be patient..!;   Be a Savvy Investor..!!

Pankaj