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Market trends & terrorist attacks

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DP-BLOG-GRAPH-1Market trends & terrorist attacks

(This presentation is simply an observation on how Indian markets behave post terrorist activities. It is not a call for market top or bottom but just a correlation between events and price behavior. )

Past market data points to an unusual, coincident between market trends vis-à-vis terror strikes in India. It has been noted that, such strikes have occurred while the market sentiments were either too poor or when it was in the midst of an intermediate pause (time based correction). Coincidentally, when frequent flow of grim news- Economic or political (Lokpal Bill and low market in this case) have bombarded our social life, and overall sentiment is cautious, terrorist attacks have occurred during the same phase. This is, kind of an indication that the market is flooded by extreme bad news and is likely to reverse.

 Most of the terrorist activities have occurred at the beginning of a new market trend or after a prolonged correction when the market was already at the bottom or close to the bottom. Recent example is 2008 bottom, when the market had already corrected significantly and was consolidating at that time. Such triggers act as a prior indicator of a bull rally or end of correction.

Currently Market has already corrected nearly 22% (at extremes) and 13.5% below recent top. The present position is actually time-based correction. Last bear market lasted for 15 months (where market made bottom within 10 months time frame) and we are in corrective phase since last 9 months.

 Combining the price formation along with the news flow, it has been observed that, events such as these have taken place mostly near the trend-line, with a particular interval almost maintaining the Fibonacci relationship.

(In interest with timeliness this documents has not been edited)

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Written by Dwaipayan Poddar

July 14, 2011 at 2:29 pm

Posted in Uncategorized

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