Is PVR entering a Bear Market

The biggest problem with stocks is that when they fall, they fall big and quick. By the time a investor realizes that a stock is starting to weaken, it would have lost quite a huge chunk putting a question as to whether the investor should hold the stock with the hope that the stock will soon climb back to the old levels or cut the loss before it becomes too big to cut.

PVR has had a golden run since 2011 appreciating by 116% in 2012 and by 131.4% in 2013. 2014 though seems to have started off badly as it has in these three months lost 25% from the closing price of 2013.

A stock / Index is said to have entered a bear market when either of the 2 conditions are fulfilled

1. The stock loses 20% from its peak.

In case of PVR, we are down way below the 20% mark & hence that condition is fulfilled

2. The stock closes below the 200 day EMA / SMA.

In case of PVR, the stock today closed just below the 200 day SMA level (it broke through the 200 day EMA yesterday).

Technically, the stock is hence already in bear territory. The final confirmation for me would be a close below 470 which is a good support level. If that gets broken, we can see a possibility of a test of 375 – 380 pretty soon (of course, like anything, there is no guarantee and this is more of a probability based on the evidence at hand). 

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About Prashanth

Have been a full time participant in the stock markets since 1996. Run a Yahoo Group where focus is exclusively on discussions of the Indian Markets using Technical Analysis as the tool (groups.yahoo.com/group/technical-investor)
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