Technical Analysis of Indian Equities by Nooresh

Sensex Bear Cycles of 1993,2001 and 2008…

Just pasting a section of the presentation Come look into the future .

5. Bear Phase , Bottom Formations, Reversals and Big Signal

Till now we have seen the broader picture on the longer term and have concluded that a bottom formation is very close .
The next thing to look out is to confirm a major bottom and the end of the bear phase.
But more important is to find the next big signal before the start of the next bull wave.
Sensex has had two notable bear phases after 1992 and 2000 which were characterized by unveiling of scams ( Harshad Mehta , Ketan Parekh )

Bear Phases after 1992 and 2000 :

In the bear phase after 1992 top Sensex took around 13 months and after the 2000 top it took around 19 months.
The consolidation phase later on took around 6 -7 months in the 1992 correction and around 19 months in the 2000 correction before markets gave a good breakout signal.
There is another theory 8 year cycle which warrants for a 55 % absolute fall just like 1992 and 2000.
Although the topping out scenario is different this time around as we are no more in the earlier flag scenario but in a much bigger 13 yr cycle and a bigger wave.

The previous two charts show a very similar pattern. This could be termed as waves, channels, triangles etc and different notations in between but explaining them in Dow Theory would be easier for all to understand.

As we see Sensex made a series of lower tops and lower bottom during the bear phase.
Later part sees falls becoming lesser in magnitude and a formation of higher tops and higher bottoms with a simple trend line breakout above previous high gives the Big Signal of a REVERSAL.
Lets See Sensex chart now !

SENSEX current Bear Phase and Reversal !!!

A similar comparison with current scenario of Sensex it seems its very close to the end of bear phase and a few down legs and consolidation maybe left.
Although there would be different views regarding the bottom but the conclusions from the above analysis it should either be close to 11900 + - few hundred points or even 12500 itself.

But at the current stage what is more important is the downside is limited and the upside potential in the longer run is still maintained !!! Although markets could remain in a trading range and consolidate till Sept/Oct 08 or till Jan 09 before giving the big Signal which can come any time after but is not faraway .

We will review the situation when we see important points in the possible 1-2-3-4 formation shown .
Best Regards,

Article by Nooresh Merani

Nooresh has written 2555 articles.

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