IT and Technology Sectors were in bull market from 1996 to 2000. Since then they are in a bear market for the past ten years. Nasdaq has failed to move above its 2000 high for the past 10 years. So this sector cannot lead the next bull run.
Reality, Infrastruture and Power sector led the recent rally from 2006 to 2008. So this sector is unlikely to lead the next bull market. Normally, a sector which saw a bull market is likely to be in a bear market for atleast for another 10 years.
Banking and Pharma sectors have been already in bull market since 2008 . so this sector is unlikely to see a bull market in the next bull market.
FMCG and Sugar sectors are in sideways market for the past 4 years and it has seen a bull market in the last 10 years. So these sectors are likely to lead a bull market in coming years.
The stock market is always cyclical. It will never be idle for some. Because markets are there because of demand and supply and this demand and supply is due to perception of the market by different people with different views.
Since the supply and demand is created by the emotions of the investors, it never going to idle. It will move up or move down constantly. These movements can be seen in long term, medium term and short term. Long term can be considered as a period above 1 year. Medium term can be considered as 6 months to 12 months. Short term can be considered from 1 month to 6 months.
Since stock markets are cyclical, the ups and downs are seen in all time frames. A long term investor has to hold his investments for more than one year. Some think long term investments are investments which you should not sell, even if you see good profits.
But term investments should be made when the markets are low and long term investments should be sold when it is high. No need to hold it continuously without booking profit.
Technical analysis is the study of historical price movement of the stock. Study of this charts show, the price movement is always patterned. Almost all patterns are repetitive in nature. This is the basis of Technical Analysis. The repetitive nature of the patterns helps an analyst to forecast the future price movement of the Stock.
Even though this is the basis of the Technical Analysis, analysis is also based on the momentum of the Market. In Stocks, as long as a stock is momentum, the trend is likely to continue. Once the momentum comes down, it foretells a trend reversal. Many of the Technical Indicators are based on this concept.
Another popular method of Technical Analysis is Elliott Wave theory. The basis of this theory is on the assumption that the movement of the stocks are fractal in nature. Fractals are patterns which when dissected turn it to be a same pattern as the original pattern.
Apart from these concepts, there are other type of analysis based on their own assumptions.
Silver was trading between 4 USD and 9 USD since 1984 before moving past the 9 USD in 2004. After breaking that level, it started to rally and made an all time high around 29 USD.
The present technical setup suggests that it is in a long term expanding triangle since 2004 and the present leg seems to be the last leg of this bull market. Earlier the upside legs are formed in 2006 and 2008.
Since, the first two legs seems to be alike and have same magnitude. So the final leg, which we are seeing now till 2010 is a extended one. Extensions happen when two legs tend have same characteristics.
For Gold none of the legs are extended. so, the rally is gold is clearly periodic and it is smooth. But for silver the final leg is extended, so it is seeing a big rally in 2010.
Since the present rally is in course since 2004, so far it has been in bull orbit for the past 6 years. This implies it is likely to followed by 6 years of bear market. Since the present rally is its final leg, silver is most likely to top in 2011.
Success in investment and trading depends upon the trader's money management and sticking to decisions. Money management is nothing but protecting one's capital even if it turns out to be losing trade.
Always start small. Start trading with a small capital. Then slowly one can increase the trading capital.
Be aware that one is trading in the stocks for making money not for enjoying the trade.
Always risk the money that you can afford to loose. Most of the traders get wiped out of the trading due this only.
Always trade with a plan. Plan your entry, exit and stoploss very clearly before you initiate the trade. And dont trade the plan after the entry.
The trader you can keep his emotion like greed and fear under his control can succeed in trading.
