Until about July this year, market was fun! Midcaps were flying, stocks we owned were hitting limit up on successive days, momentum was high so trading was great as everything you bought or sold was moving like you thought it would. It seemed like a great time and one wished that it would never stop. But as it always happens, the good times did roll to a stop. Then they started rolling over, into bad times! Suddenly, there were gaps to the downside, some of them pretty nasty and the indices were moving like they were back in 2008! Hell, we thought, that was supposed to be a once-in-a-century move? Why does this one look so familiar?
And as always, when there is a rapid shift from one state of the market to another, paralysis strikes. We are unable to move and we wonder why? It was just last month that we were all fluid-like, moving with ease from one mid cap to another, taking in 5% here and picking up another 10% there even as we encashed a 3% gain on a trade. It was all greased. Then what’s happening now? Why are my limbs refusing to move? Why don’t I want to watch the market opening like I used to just a month ago? Why don’t I look at my portfolio of stocks five times in a day like I used to? Why am I not anxious to search for the next stock to buy?
Now, the paralysis has given way to stasis. Having now got used to the fact that the markets are perhaps not going up, we are getting into a state of boredom. We continue not looking at our portfolios, we have stopped chatting with our chartist friends about where the next breakout is or where the next supports are for us to buy, we have CNBC now on mute most of the time and expiry can come and go and we don’t really care because there is hardly any position left in the futures! Markets are moving the same but we feel they are at a standstill.
We are all really waiting for the market to pick up its trend. We are willing to forgive its current transience, just let it get back to what it was doing so that we can all get back to what we were doing- having a good time! But markets can sometime surprise with the extent of stasis that it can create. Students of history will know that the Dow had two sustained periods of dullness- each of which lasted about- hold your breath- 18 years (1906-1924) and then 16 years (1966-1982). The Sensex is no stranger to long term boredom either. We had a long 11 year consolidation that bored the hell out of all of us back in those years (1992-2003). Imagine the plight of the Japs; they are still waiting for a revival since 1989!!!
Point is that we have to learn to cope with boring times as much as we do with exciting times. It is difficult to know when one ends and the other begins and how long it will last. Time analysis in technical will help us to do that to a good extent. But that is not something that most people have skills at, as most TAs are price based. Idea here is not to suggest that we are in any way getting into a long consolidation. Just to bring out the aspect that we should not get frustrated by boring phases. Instead, find ways to deal with them because they are as much a reality of the market as are trended phases.