Tuesday, June 29, 2010

Massive Rally after Bear Markets

Finance Trends Matter has a post about Massive Rally after Bear Markets. There are two points that you can take away from the post. Firstly, market can rally for a long period (1000 days or more) after a massive bear phase. Secondly, these rallies would encounter a period of correction approximately 250-450 trading days after the start of the rally. It so happens that we are about to enter this period where market weakness is expected. So, we must be careful not to be sucked into the current market weakness.


Chart: Rallies after Massive Bear Markets (Source: Chart of the Day)

For more, go to here or here.
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3 comments:

  1. AnonymousTuesday, June 29, 2010 4:39:00 PM

    Hi Alex,

    I bought a QL stock.Now the market is bearish for a moment.Did i hold and sell?


    ken

    ReplyDelete
  2. Alex LuTuesday, June 29, 2010 5:33:00 PM

    Hi dipankara,

    QL is still trading very near to its recent high of RM4.06. Its technical outlook is still positive and it has horizontal support at RM3.95 & then at RM3.85. The stock has however risen from a low of RM1.70 in October 2008 to a high of RM4.06 this month- a gain of 239% over a period of 21 months.

    If you think that the market & QL may slide, then you may want to step aside now. This would entail a trading SELL where you would exit a position & re-enter it after a certain percentage decline or after reaching a certain technical level (such as horizontal support or a XX-day SMA). Assuming a 33%-retracement of the recent gain of RM2.36 [RM4.06 minus RM1.70], QL could correct back to RM3.28. However, this is only one possible scenario to consider. If you agreed with the assumptions, then it is fairly reasonable to reduce your position here [or, take some profit as the case maybe].

    ReplyDelete
  3. David ShvartsmanWednesday, June 30, 2010 4:00:00 AM

    Thanks for the link, Alex. I like your chart annotation! :)

    ReplyDelete