Bear Market vs Bull Market!

Big debate is going on all channels, since the jan'2008 fall and correction happened from there on, whether our markets entered bear phase in a bull market or bear market has started already! While markets have their own dynamics and mind too, as some people believe, few observations will indicate the commencement of a bear market:

1.Leading stocks and sectors of bull market fall more than the indices in percentage terms.
2.Stocks and indices trade below 200DSMA/100DSMA/50DSMA etc.,
3.Fall in prices of stocks or value of indices are higher than raises.
4.Defensive stocks and sectors will be outperforming the other sectors and indices...viz., pharma, fmcg, media etc.,
5.Any negative news will have larger impact than positive news, and stocks/indices continue to make new lows.

Well, one can easily observe all the above are already in place, but still investors and analysts, having tasted a strong bull market from 2003 to 2007, are unable to digest the bad news. Further 4 year bull market will have atleast one year bear market or bear phase since 5 is again a fibonacci number, thus, year 2008 having made highs in January'2008, cannot reach those highs during the year. However, the mute question now is whether the 4 year bull market ended in January'2008 and are we into a multi year bear market?

In my opinion, as things stand, on GDP front, inflation, crude prices and interest rate scenario, this year will be a bear dominated one, and it might extend till first half of 2009 too, owing to political situation in our country; The trouble now is indices are trading and consolidating in large band which gives raise to huge volatility on either side. While investors who entered in the beginning of 2008 are already sitting on losses, including mutual funds, trading community are worst sufferers, whose capital is already eroded, due to volatility and uncertainity.

What to do in such a situation? Any investor should increase cash levels by selling into rallies and be satisfied with small profits, intra day or on overnight positions too. Times of making easy money are over for now! Investors can identify good dividend paying stocks with strong fundamentals too and add to their portfolio which will give good returns when the trend turns again to bullishness anytime.