Whenever bear market rally is there its always been a low volume and there is definitely a reason behind it. The people feel tired looking at the market which never goes up and then tend to move out of the market and does not look at the portfolios.
Bear Market Rally
I was doing some research about the historical data of Nifty and Sensex and I have seen something interesting. In the history of last 4 decades we have seen almost you can say 14 Bear Markets. In each bear Market there was a sharp V Shaped recovery and that V Shaped recovery is similar to the current Bear Market V Shaped recovery.
Bull Market
Again the above data I used to see if there is something different from the previous rally and I found one thing which is Volumes. All previous bear market rally had always been a low volume and there is definitely a reason behind it. The people feel tired looking at the market which never goes up and then tend to move out of the market and does not look at the portfolios. This means low participation for a very elongated period of time and this low participation drive the recovery and as the interest of people come again the next leg of downside comes in.
Conclusion
Current Rally is a bear market rally based on pattern but a bull market when you look at volumes. So now it’s your call to decide what it could be. No marks for guessing because you may now know that I am an all time bullish on Indian Equity market.
Lee,
S&P 500 going below 666 is very much unlikely but yes its not impossible provided the recent Jobless Data this week but emerging markets don’t expect to touch March 2009 Lows.
Thanks
Shabbir
I would say the stock market is in a rally of a bear market. From March 2009 to June 2009, it was recovering from steep declines which is normal on a bounce back. The short term affect is positive but the long term affect is still negative. Remain in money market funds at the present. If you are still in stock funds, then you will have to wait this out. If the S&P 500 Index goes below its 1 year low from March 2009, then a critical decision will have to be made to transfer to money market funds or continue uncertainty.
Stock Market Consultant for Mutual Funds,
Lee Smith