Great Ponzi.com

2008-09-09

Start of bear market (Canada), TSX analysis


This is a simple analysis done using the 100 day moving average on XIU, the main index ETF for TSX.

Note the values in yellow, which show the recent extreme rise of the market above the 100 day average. You can see that the market peak in 2008 (on commodity insanity) was the first time since the year 2000 that the market got this far ahead of itself.

The other noteworthy point in the table is the subsequent decline after these highs. 2007 was the first time since the 2000 bear that the decline exceeded 8%.

And the current decline right now has exceeded the levels of the first leg down in the 2000 bear.

All of this suggests to me that the TSX bull market is over, we're in a bear market similar to 2000. Fundamentally speaking it's probably the continuation of the same bear.

EDIT: This table has been updated to show the major decline following the May 2008 rally

Date of strong TSX rally

% above 100 day average (showing >= 7%)

Subsequent decline after strong rally


2000 March

16%

-13%

Approaching market peak

2000 August

17%

-45%

Bubble peak, start of bear

2001 December

9%

-7%


2003 June

9%

-3%


2003 July

8%

-2%


2003 September

8%

-4%


2004 February

9%

-7%


2005 February

8%

-6%


2005 August

9%

-8%


2006 January

9%

-3%


2006 December

7%

-4%


2007 May

7%

-4%


2007 July

7%

-12%


2008 May 20

13%

-42%

Similar to 2000 peak



- Perpetual Bull