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Monday, March 9, 2009

Stock Market Trend - Sinking Slowly

The stock market resumed its decline last week, with the BSE Sensitive Index finishing 6.36% or 565.79 points lower, and the Nifty 5.19% down. The CNX Midcap Index lost 6.09%. Today, 9th March, BSE SENSEX lost another 165 points or ~2%. So what are the current stock market trends? Where are the world stock markets heading? Should you buy stocks at this time?

Sensex at fresh 40-month low
Sensex have registered a 40 month fresh low of 8,160.40 on all-round selling by foreign funds and operators. Sustained selling by foreign institutional investors (FIIs) continued to daunt market sentiment.

CHECKOUT: Interesting SENSEX Analysis

Nikkei at 26-yr low on current a/c deficit of $1.76 bn
Japan's Nikkei 225 Average closed at 26-year low as Japan posted current account deficit of $1.76 billion in January. Its exports to the US were down 53% in January. It is trailing at 7,086.03.

The World Bank has predicted that the global economy will shrink for the first time since World War II and trade will decline the most in 80 years.

CHECKOUT: Dow Jones Below 6600 - Stock Markets in 2009 - Where Are They Heading?

INTERMEDIATE TREND:
The market's intermediate trend remains down, and the main indices are close to their bear market intra-day lows of October. The CNX Midcap and one in three of the more heavily traded stocks already hit new bear market lows last week. Global markets are in intermediate downtrends, too.

The Dow needs to cross 7,500 to enter an intermediate uptrend. The BSE Sensitive Index has to cross 9,000 for an intermediate uptrend. The corresponding level for the Nifty is 2,800 and that for the CNX Midcap is 3,235. These levels will drop to the point where the next minor rally tops out.

LONG-TERM TREND:
The market’s long-term trend is down. The Sensitive Index will have to cross 11,000 for a bull market. That figure will come down to the last intermediate top of 9,725 should this decline take the main indices below their October intraday lows.

READ: Stock Market 2009 Predictions - Where would it be in Feb-March 2009?

TRADING & INVESTING STRATEGIES:
This intermediate downtrend is now four weeks old, and longterm investments may be made in small numbers, to keep downside risk manageable. Stocks making fresh bear market lows should be avoided, as these may have a lot more downside left than stocks which are holding out.
This is a gradual portfolio building exercise, and is not in anticipation of an early end to the bear market.

GLOBAL PERSPECTIVE :
The major and intermediate trends of all global markets remain down. The Dow and most European indices made fresh bear market lows during the week, with a few making multi-year lows. The Nikkei ended the week barely a couple of hundred points above its 26-year low.

The BSE Sensitive Index had lost 50.4% in the twelve months that ended on Thursday, down one position to the 27th place among 35 well-known global indices considered for the study.

Chile continues to head the list, but with a 13.5% loss. New Zealand, Slovakia, Malaysia and Spain follow. The Dow Jones Industrial Average has lost 45.2% and the NASDAQ Composite has lost 41.5% over the same period. (These rankings do not take exchange rate effects into consideration).

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