Thread by @therealfortunex

How long will CSE's bull market continue for?

I have used the 200DSMA as the filter which is what most use. We look at how well it has filtered out price action for the past 20 years

#stocks #SriLanka #lka

As you will see the indicator alone is not enough to confirm a trend. There have been times where price action has whipsawed giving false signals. All indicators give false signals at times so nothing is 100% accurate

Chart 1 - The longest bull market CSE has had which lasted for roughly 5 years. There were a few whipsaws where prices crossed below the MA but the slope is always what needs to be watched and it remained + during all those times

1 false signal came late during the bull market

Chart 2 - Start of the bear market, we again saw a few whipsaws during that period but the slope would have filtered them out giving a signal for the buyers to remain cautious regardless

Chart 3 - The 2009/2011 bull market clearly had no whipsaws and signaled the new bear market clearly as prices broke below the MA and held below it on the pullback towards the MA

Chart 4 - This bull market which started from late 2012 had multiple whipsaws but again the slope filtered out most breakdowns except one.

The time the slope did turn negative but prices rounded over quickly giving a false bear market signal

Chart 5 - The bear market here was signaled as the slope turned negative and there after we saw a few more whipsaws along the way but was again filtered out well from the slope of the MA

Chart 6 - Good example of why other indicators must be used. We got another bull market here but with a lot of whipsaws. A lot of confusion was caused during this period which was clearly a very difficult period to trade
It eventually looked like a bounce of an overall bear Mk

Chart 7 - A new bullish trend start here as well but lasted very short. Around 6 months long even though the 200MA did act as a good filter on the throwback towards it
The #COVID19 crash followed thereafter

Chart 8 - A new bull market started late 2020 and continues to remain strong as prices crossed above 11,000 gaining over a 100%

1) So looking at the overall data, the 200MA has acted as a very good filter with only a few false signals. The slope more importantly was important to keep an eye on as it proved to be a much better filter to avoid any fake outs

2) More indicators must be used. If you have been following me for a while I have constantly posted the 10 year price channel which prices broke out of in Jan resulting in a 2000pct rally. Most of the price action between 2011 - 2020 was mostly in pullback of a secular bull Mk

Looking at the overall trends and how long the bull markets have lasted,
on average most bull markets last for around 2 years so we are still looking at prices continuing its upward trend till mid next year