Taming of the BULL-Crash of 21 Jan 2008

It was long in coming. Much anticipated correction since October 2007.

The crash during october 2007 actually did not happen. That was a side show to get retail investors lulled into believing that market can bravely take a hit and move up easily. As always last rung of current uptrend is signaled by a flurry of cheap mid cap or upcoming stocks.They rush in to invest and and find most stocks are over priced and try to find some thing that suits their budget no matter what FA/TA says.

The current crash truly signifies a CRASH and market will be in for a long haul to repair the damages resulting from it.

Currently both sensex and nifty is hovering around their 200EMA mark which was pointed out earlier on in my thread of Crash and FII activities (17.5.2008).

That time market was around 17K and EMA was 12500 or so for sensex and proportionately for nifty.

Now EMA200=5068. Nifty has already come to this level. So if it does not bounce back from this level withing a month and break above EMA 100 ( 5567), market will be in for trouble on long term basis.The breakout has to happen on sustained strong volumes. The weakness will persist for months in midcap and small caps.

1.FIIs have been largely net sellers during this month. Since 14th Jan they are huge sellers as usual.
2. Govt has permitted them to short sell so they may be gaining hugely on both ways. Their hold on market will be still stronger and can take it where ever they want to.
3. No of tip giving threads had increased in this forum, of late.

However there is a note of optimism here with a word of caution.
(what is written below is purely speculative and may not have bearings on market in abnormal situations such as bear trend being confirmed.)

FIIs and their bankers have burned heavily in USA sub prime crash. Before closure of FY08 they are milking the cash cow to straighten their Books.
But it may not be killed off. So For the time being there is no option for the market but to go up and it will achieve its stated target of 25000 or above by year end.

Budget is due in February 2008 and it will take note of the situation. Indian companies will have good news so watch finance ministry and Chidambram very carefully.It will help.

Fundamentally strong companies will always bounce back early. So watch out for your favorite stocks.
Long term investors will benefit most from the crash as they might loose some profit(if not booked partially) but gains will be more.

2009 is an election year so we will have to face uncertain times in 2009.

Indian economy will perform better and hence market may go up.

In fact I see the scope of growth in the countries like India China Russia and so called emerging markets by sheer weight of population.

In sum this crash has come at a good time, when there is scope of good news flow in future and hence fast recovery. So it is an opportunity for long term investors to get into action and search for good quality stocks.

After all FOOLS who buy early are relatively wise .

Remember, Jallikattu( Bull Taming Game in Tamilnadu) is held every year. That means there has to be a BULL that needs to be tamed ( and every year)

Pankaj

Hi Pankaj,

Thanks for this useful information and your thoughts, I enjoyed reading it

What I would like to ask you is - do you think that in next couple of days there is a definate possibility that we can see GREEN Color on index?

Or do you think the Holi mainly with RED color is likely to continue? I will appreciate your views.

Regards,

i dont understand what u people are saying, at what price will sensex open on 22, 23, 24, and close?

u will understand with the time.....
till sensex closes abv 18450 , bulls will not know from where they came from.........!!!!!

What all stocks do u suggest then .Considering this as a +ve sign of things to come.

"That means there has to be a BULL that needs to be tamed ( and every year)"

Very well Said Sir . Unfortunately I was riding the tamed bull so badly bruised

Pankaj,

This cruel procedure will maim the bull instead of taming. Just joking
As usual, a very informative post. Thanks

Wait!

4 few more days.. Dont rush... as of yet

I am buying for every 500 dip and keep it gong. It seems a good shopping season for long term investor. good brands on sale with good discount.
Hope to see more discount till march/

BUT THE TRILLION DOLLAR thing is that mkts have entered bear grip & bears will lose fur only abv 18475 close....