Global markets are in midst of a severe sell off. We are in a terrible bear market, and the question we need to ask - Is this the repeat of bear market of 2000-2002?
The answer is may be YES.
There is amazing similarity you can spot on charts between what is happening now and what happened in 2000-2002. The image below is the Nifty weekly chart of 2000-2002 period -
As you can see in the chart above, the 2000-2002 bear market was not only painful in terms of price correction but also time correction. Here are some facts -
* Nifty peaked in Feb 2000
* It then took 8 months for the market to slide to 200 week moving average. The price correction was 36% and it happened between Feb 2000 and October 2000.
* The market then bounced back from 200 week moving average - 20% bounce. This was Oct-Feb period - generally goo d p eriod of equities
* The market then tumbled below 200 week moving average in March 2001.
* The market sharply tumbled 30% on break below 200 week moving average.
* Time Correction - It took 29 months for market to recover once market slipped below 200 week ma. It was a painful slow recovery.
* Every rally below 200 week ma got arrested at 200 week ma during those 29 months of recovery.
* The bull market resumed when market finally broke out above 200 week ma in August 2003.
Ironically now, a similar story is getting played out in 2008. FYI - 200 week moving average = 3648. This level also coincides with 50% retracement of bull run from 920 to 6300.
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