As we move further into this bear market, we are going to be witness to changing conditions not just of our own local market movements but from others as well.
This was projected yet again through the big gap open on Friday, a condition not generated by our own dealings. We tried to be ready through a study of the Euro, Dollar and the Spx which we did ahead of the Holiday in this post here, each of which went as expected to the given targets.
Bear markets are a continual battle between deteriorating fundamentals and the governments attempts to abort the cleansing process. That is the scenario for very difficult trading conditions.In 2008 even though our market was not as affected, the liquidity pump given to industry is now showing it’s ugly head in run-away inflation which the RBI is having a difficult time to manage.
The news from Spain and Italy and the Fitch downgrades reversed a tear away rally which 3 days earlier had reversed a water fall like decline!
In such markets one has to be willing to reverse positions quickly, because fundamental perceptions can change fast and profits evaporate.
Unless someone had inside information that the downgrade was coming there.