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SBI Capital : Most Trusted Bank in India : A Detailed Review

When you start earning money saving some of it for a later stage may be the last thing on your mind. Most of the times you may delay in making savings by assuming that saving can be done later when yo...
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Graphite India share price analysis using excel sheet

Graphite India is a virtually debt-free company Stock is trading at 1 time of its book value Graphite India provides a good dividend yield of 19 percent The current stock price is 277 Graphite India f...
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How Does Atal Pension Yojana Work?

Investing in a pension scheme is of extreme importance to provide income stability. To provide a contribution based pension scheme, the Government of India introduced the Atal Pension Yojana. The APY ...
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ICICI Direct: A Detailed Review

ICICI Bank Ltd was established in 1994 by the Industrial Credit and Investment Corporation of India (ICICI) which is a financial institution. It is a multinational banking and financial services compa...
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Kotak Securities: A Detailed Review

Kotak Securities Limited (KS) established in 1994, is a subsidiary of Kotak Mahindra Bank Limited a renowned private-sector bank headquartered in Mumbai, Maharashtra. It is currently one of India’s la...
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Share Market Tips For Beginners:

Investing in the stock market is one of the best ways to generate a source of income through a quick and easy way. Hence In this Article, I would like to share the foremost points of Investing in shar...
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Bull and Bear Markets and How to Tackle Them? - MarketSmith India

Bull and Bear Markets and How to Tackle Them

We are familiar with basic terminologies such as the bull market, bear market, and correction. In simple terms, a “bull market” is when the market moves higher and a “bear market” is when the market moves lower. However, one needs to understand that a new follow-through day and short-term uptrend do not necessarily signal a bull market. Similarly, short-term downtrend does not necessarily indicate a new bear market.

Bear market versus interim correction

Interim corrections can occur even within an upward trending bull market. This is when the major indices cool off a bit. The indices will consolidate for a few weeks or months, before resuming their up move. This phase of consolidation is what we call “interim correction.” The depths of these short-term corrections vary; it can be about 5%, 10%, or 15%. These interim corrections will be mild, not enough to change the underlying bull market.

As a rule, a decline of less than 20% indicates an interim correction. However, if the indices fall 20% or more, then it is a bear market. In the bear market, stock prices decline and investor confidence is low. Although the length of the correction varies, bear markets typically last for a few months.

Interim corrections usually last from a few weeks to a few months. Bear markets are generally triggered by underlying weakness in the economic conditions or by a global or country-specific slowdown. The market, however, may or may not recover quickly from the bear market and cover up its losses. If it doesn’t, then it becomes what is called a prolonged bear market. In a prolonged bear market, which may last for more than 2–3 years, general market sentiment is of despondency with only small intervals of upward rallies.

How CANSLIM can help investors through market turns

CANSLIM is a systematic approach, which can tell you when to be aggressive in a market where risks are low and rewards are high, as well as warn you to cut your position size when the risk-reward ratio contorts. When the market is in a bull run, the market status reflected by the CANSLIM methodology would be a “Confirmed Uptrend”.

Further “follow-through days” during a Confirmed Uptrend signify the strength of the market and will be an opportunity to further increase your exposure and multiply your gains. However, more importantly, when the market strength fizzles out, the status tracked according to CANSLIM (using distribution days) will also start degrading and will turn into a “Downtrend.” This will be a signal for investors to reduce, and eventually call-off their bets, thus protecting their hard-earned capital.

Disclaimer: Information contained herein is not and should not be construed as an offer, solicitation, or recommendation to buy or sell securities. It is for educational purposes only.

 

To Read Detailed Reports including Stock Recommendations, Idea Lists, Evaluate Stocks etc. subscribe to:  MarketSmith India.

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BEST STOCK PICKING PRACTICES FOR BEGINNER INVESTORS

Now that you have finally decided to invest in the stock market but wait! There are thousands of stocks out there listed on NSE and BSE, how you are supposed to choose the right one to start your equi...
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Learn How to Start Trading For Beginners

Before beginning in the world of Trading you just need to keep academic work of the Financial market as you know that a few people make money from the Stock Market. Furthermore, the following informat...
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What Is HNI or High Net Worth Individual?

I don’t know generally that have you know or not about those peoples who are very less in numbers they are actually not those Individuals who do not want to bring out the tactics of Finance, Accountin...
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Savings Accounts – All FAQs Answered

A savings bank accounts is the first bank account we open, either jointly (as minors) with our parents or when we turn 18. This account is the perfect vehicle to park your savings and withdraw or depo...
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Learning from mistakes in the stock market

If you get half percent smarter each year you will be genius when you die Before reading this blog ask yourself whats the single most important step you must take to become a successful trader. Keepin...
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