Long term Outlook of Sensex, 20 January 2006

LONG TERM OUTLOOK OF SENSEX




Jan 20, 2006 D Sathia Moorthy asksathia@hotmail.com




Technically, the high of 4546.58 formed on 1992 is the top of the previous bull market. Since 1992 the market is in corrective mood, though it moved past the high of 4546.58 on 1994 and 2000. The low of 2594.87 formed on September 2001 has terminated the corrective phase. Since then the market has been in bull phase. This bull market has so far completed four years. The previous bear market lasted for 9 years (1992-2001).


From January 2004, to till now, the market is forming a running triangle. In terms of Elliot wave count, we are in a running second corrective wave. The tip of the running triangle in a bull phase is normally being the center point of the complete bull phase. So, from the low of 2594 to 9600 it has appreciated more than 3 times. Since long term charts have to be calculated in logarithmic scale, the move beyond the tip of the running triangle would be at least 3 three times the value from here and it would take more then 5 years to reach the top.


Obviously, the thrust out of the running triangle will show the highest acceleration in this bull phase, which means, the coming 12 months could see the highest acceleration in this bull phase. In long-term charts, this period will be seen as a vertical line without any big corrective moves. Runaway gaps are the phenomena of the market at this juncture. From Investment point of view this period is going give the highest return on investments.


Once this thrust out of this running triangle completes, a big correction will follow. And the correction will be followed by upside expanding triangle formation, which will take a very long period to get completed. After that a massive bear phase would start.


Note :- The above analysis is for educative purpose only and it is an attempt to show a rough picture of the Sensex movement in coming years.


Disclaimer


Readers must be advised that while the information herein is expressed in good faith, its accuracy is not guaranteed. There is always the risk of loss while trading for which the Author is not responsible. The views expressed in the website is just an analysis based on Technical analysis and it should not be construed as an offer for buy or sell. Anyone trading based on the recommendations are doing so at their own risk and the Author is not responsible for any financial loss arising out of it.