Sunday, December 28, 2008

Where is the market now?

Updated Chart:

2008 has been a horrific year for investors. There are a lot of people who lost a lot of money and have lost confidence in the long-term sustainability of the market. So where's the market right now. (click the chart to enlarge)
On looking at the Nasdaq, it did retrace back to 1600 , which is 50% of the down move from 1900(october gap) to 1300(market low). For the non-technicians what this means is , the market made a bottom on Nov 21st 2008, went up and hit tremendous selling at the 1600 level. So for the market to make any big move right now it has to power through that level(1600) and in order for market participants to take it past that level, they need to see evidence that there's further easing of the credit crisis and some kind of a recovery in spring 2009.Other wise we will see further price declines in 2009.
For the long term: (click the chart to enlarge)
In the picture above you can see that Dow jones average went sideways after a prolonged bull market.(see 1905-1920, 1965-1982).Usually the price earnings has to go below 10 inorder for the next long-term bull market (ie one that lasts ~14-20 years , for example from 1982-2000). I think we are in one of those situations were we go sideways for a long Even if we get back to highs we put in 2007, we still be in a long-term trading range.

Sunday, August 03, 2008

long term market trend

( click on the image to enlarge it.)

A stock chart of an index , like s&p500 , can be used to determine when a major bull market starts and when it ends. As you can see in the chart , it started in 2003 may-june and ended in 2008 January.

In a capitalistic economy, after a cycle of economic growth we have to shed the excesses to start anew (in this cycle the excess is housing&banking , last cycle it was technology, in the next cycle it might be Energy) . This shedding of excesses could take some time depending on the magnitude of it. Stock Market usually turns up way before the economy turns. Actually it turns up when people have no interest in buying stocks due to the gloomy economy at that time period.

But charting can be used to determine when the economy is going to turn and to start buying stocks. This method could be used to allocate your long-term investments.

In the picture above i've identified some markers which could be used to identify the next turn. Any free charting website could provide you this information.

Hope i use this the next time it turns around.

Saturday, June 21, 2008

long term s&P trend is down for now-watch the monthly chart

watch for cross up or down of price on the 21-month moving average.currently price went below averge in in jan-2008, and it retraced back to averge line in May and pulled back.