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See...there are 2 things....One is a trend and other is a correction in the trend...
The only big confusion in the stock market is whether it is a trend...or a correction in the ongoing trend or a complete trend reversal....
The phase which we had till Jan 2008...was a trend...a bull trend..and the intermediate corrections were mere corrections...which got immediately bought off....
Same is the case now...what we are in is a bear trend....Every rise/pullback is kind of correction...Which will get sold off...just as opposite to the bull trend...but the problem is ...as many of the traders are used to buying low...Its human psychology...cant help it...
Trend doesnt change in one day....it takes time...Imp pattern of trend reversal is - Head and shoulder pattern...
Also...trend reversal happens after a major peak..or a catastrophic bottom...
I will explain the psychology behind it..When the markets were near 6300 levels...and Rel Power was arnd the corner...U can recall tht even panwalla...a cobler...housewives(layman person)...was ready to buy it...Such was the euphoria...When such kind of euphoria comes...then its the end of the bull market...
Now the technical reason...even the last man standing has bought the shares...then who the hell is left to buy them nemore....Who will drive up the stock prices....When every1 knows tht market will touch 25k..30k...nifty 8k....then who the hell is the smart person...will the smart money enter???when all the fools were entering??? No way...ask urself these ques....
Everybody knows...tht UPA has won the election...and market is going to touch 5000...WIll the smart money enter..No way.....They will first take you to 4000 levels...make u exit bcoz of fear and panic..and then move higher...and make u stand outside....
Now coming back to trend reversal....Till the point the last man standing sells his shares...and swears to god...tht he/she wont trade..bear market wont be over....Till the point the analysts on TV dont say tht dont buy..there is no point staying in the market...it wont be a bottom....
All the analysts on TV are saying tht its a good level to buy...repeatedly....IF all the common ppl and weak hands buy now...will the market be able to rise...NO way..bcoz they will sell after 2000/3000pt rally on the sensex....bcoz they are the weak hands...and market will never let weaker hands capitalise...Market will go beyond 4k..3800 levels...make the weaker hands exit in fear/panic/anxiety...and will then start rising...and will again make fool of them....
And this will keep on happening forever....the smart ppl will remain the same..and weaker hands will keep on changing...Remember this...
Now im tired of typing...lol...
Understand human psychology...and mix them with technicals...u will be happy...
I again believe...the markets will make a low below 4000...or will atleast re-test sub 3800 levels,,,donno wen..2mrw...may be next week...month....
But they will surely...I will keep 2 factors/checkpoints for my short covering...close above 4545-4670..and the last point for bears is 5370,,,thts it...
The only big confusion in the stock market is whether it is a trend...or a correction in the ongoing trend or a complete trend reversal....
The phase which we had till Jan 2008...was a trend...a bull trend..and the intermediate corrections were mere corrections...which got immediately bought off....
Same is the case now...what we are in is a bear trend....Every rise/pullback is kind of correction...Which will get sold off...just as opposite to the bull trend...but the problem is ...as many of the traders are used to buying low...Its human psychology...cant help it...
Trend doesnt change in one day....it takes time...Imp pattern of trend reversal is - Head and shoulder pattern...
Also...trend reversal happens after a major peak..or a catastrophic bottom...
I will explain the psychology behind it..When the markets were near 6300 levels...and Rel Power was arnd the corner...U can recall tht even panwalla...a cobler...housewives(layman person)...was ready to buy it...Such was the euphoria...When such kind of euphoria comes...then its the end of the bull market...
Now the technical reason...even the last man standing has bought the shares...then who the hell is left to buy them nemore....Who will drive up the stock prices....When every1 knows tht market will touch 25k..30k...nifty 8k....then who the hell is the smart person...will the smart money enter???when all the fools were entering??? No way...ask urself these ques....
Everybody knows...tht UPA has won the election...and market is going to touch 5000...WIll the smart money enter..No way.....They will first take you to 4000 levels...make u exit bcoz of fear and panic..and then move higher...and make u stand outside....
Now coming back to trend reversal....Till the point the last man standing sells his shares...and swears to god...tht he/she wont trade..bear market wont be over....Till the point the analysts on TV dont say tht dont buy..there is no point staying in the market...it wont be a bottom....
All the analysts on TV are saying tht its a good level to buy...repeatedly....IF all the common ppl and weak hands buy now...will the market be able to rise...NO way..bcoz they will sell after 2000/3000pt rally on the sensex....bcoz they are the weak hands...and market will never let weaker hands capitalise...Market will go beyond 4k..3800 levels...make the weaker hands exit in fear/panic/anxiety...and will then start rising...and will again make fool of them....
And this will keep on happening forever....the smart ppl will remain the same..and weaker hands will keep on changing...Remember this...
Now im tired of typing...lol...
Understand human psychology...and mix them with technicals...u will be happy...
I again believe...the markets will make a low below 4000...or will atleast re-test sub 3800 levels,,,donno wen..2mrw...may be next week...month....
But they will surely...I will keep 2 factors/checkpoints for my short covering...close above 4545-4670..and the last point for bears is 5370,,,thts it...
reminds me of myself but remember atleast 1 bear market rally will make you doubt the bear market, technically & fundamentally too...
