Recent market action has been very volatile and hence it is very important to have a market perspective especially for next 6-15 months. Lots of questions/concerns:
CONFUSION, FEAR, FRUSTRATION... Things to remember:
Lets take a look at following charts and see if we can arrive to a plausible conclusion: Key observation in below charts is the duration taken by the market to reach a bottom and the pattern before the decline. 1. Market decline during 2001-2003 It took 13 months for the market to find the bottom. 2. Market decline during 2007-2009 It took around 9 months for the market to find the bottom. 3. Current market decline and most probable outcome How many months will it take for the market to bottom out!!! Check out the dotted line, see how NYSE volume ($NYUD) might increase as well as NYSE Index might go up. This might create a false belief (bull trap) followed by market dragging down but not plunge yet! The market will drop the way it did in August as global economic/financial crisis comes to forefront.
Why do we believe this is probable outcome!!!
Isn't this a very bold and dire prediction!!! Well, as we always say, anything can happen. Markets can do whatever it wants. Based on previous market declines and the patterns leading to market decline are very identical with current times. Hence we believe that probable future scenario is another financial meltdown.Remember, this is a "possible outcome" and not "guaranteed outcome" but its always good to be aware of our surroundings. On a lighter note, surprisingly all this might happen in 2012 and even more coincidental thing would be that it happens near December 2012.... Lets hope for the best but be prepared for the worse..... Comments are closed.
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