Bear Hug Again

Wikipedia tells us:
A bear hug is a strong, hearty embrace, as if being hugged by a bear.
While the world is not collapsing, the financial environment is certainly getting worse. Investors are naturally becoming more ‘risk averse’. Equity which carries high risk, is no longer the flavor of the season. This period is going to last for some time, till equity investment becomes more attractive than debt (and less risky). Yes, be assured, such a time will also come.

How do bear markets end ? This is a repetition of a theme discussed earlier, but here goes:
Bear markets end when the ‘public’ gets pessimistic enough to forget about shares. This has not yet happened.

What can happen to the Nifty ?
The Index has broken down from an eight week trading range, setting a target of 3800 – 3850 for itself. IF, and, this is a big ‘IF’ – the 3800 support breaks, then we have a free fall to whatever number the market likes. There is no support below 3800.

The preservation of capital is much more important than trying to make a few points in the market. Take care.

When will a time come to buy ?

As I write this post at 8:57 in the morning, Lehman brothers is expected to file for bankruptcy, S&P Futures are down almost 3% and the Nifty is trading lower by 130 points at 4085, in Singapore.

There is a temptation to buy. After all, how much lower can it get ? Remember, this is dangerous thinking. What stops the Nifty from breaking below 3800, and finally reaching 3200 or even 2650 ? I am not suggesting this will happen. My point is: never go against the market. If this market is ready to move up, then there will be signs : support will emerge, momentum will slowly change in favor of the bulls. The correct way to think this is: At 4000 levels, the Market is attarctive, therefore I will buy whenever there are signs of favorable momentum.
Any given level is NOT a buying or selling opportunity. Market action at that level creates the opportunity.