Phisix: Approaching Typical Bear Market Traits

``The biggest bull are usually too optimistic and the biggest bears are usually too pessimistic.” David Fuller of fullermoney.com

For the Phisix we believe that the downside momentum will continue as global markets attempt to find a bottom, as we noted in Phisix: Learning From the Lessons of Financial History, our four bear markets had the following characteristics…

1. August 1987 to October 1988- the Phisix lost about 45% and consolidated for 13 months before recovering and resuming another attempt to the upside. The trigger for the bear market in 1987 – ex-Col. Honasan’s August 28^th Black Friday’s botched coup d'état against erstwhile President Cory Aquino.

2. November 1989 to October 1990- the Phisix lost about 62% in about 11 months before convalescing. The trigger for the bear market of 1989 -November 30^th Makati coup again by ex-Col. Honasan…

3. February 1997 to October 1998-the Phisix lost 66% in about 20 months. But following the election of President Joseph Estrada, the cyclical Presidential honeymoon period led to the Phisix rebound of 120%. This could be interpreted as the cyclical bullmarket within the secular bear market.

4. July 1999 to November 2001- the Phisix lost 62% in about 28 months for the culmination of the secular bear market cycle. Oddly, the Phisix appear to trace the developments in the US markets or when the Nasdaq dot.com bubble imploded in 2000, for a huge chunk of this cycle.

Since we have reached nearly the 50% level we could be headed for the typical bear market losses of 60% from the market peak, which means the Phisix could further fall to 1550.

We are presently 15 months into the present bear market which begun in July of 2007. The last time the Phisix shadowed the US markets it took 28 months for the market to hit a bottom. I am not suggesting the same dynamics although, seen in terms of the US markets, the recent crash seems different from the slomo decline in 2000.

Besides everyone seems fixated on the October 10 levels, from which determines if the lows of the US markets will hold and finally form a bottom, everything is so fluid right now that we can only guess.

Phisix/S&P 500: Oversold

But technicals as shown in Figure 7 reveals of the S&P 500 and the Phisix at oversold levels.

And given the panic in the markets we ought to see some technical bounce soon.