Category Archives: Velocity Indicator

On September 21, 2021, we said the following of the Sensex Index:

“The Sensex has reach a point of exhaustion based on the historical precedent established in 1994, 2000, 2004, 2006, & 2010. This doesn't mean the party is over, as the prior years prove. Just that there will be some temporary churn or downside risk from this level..” (found here)

Since that time, The Sensex Index has traded in a range to the current level of 52,793.62.

Below is an update to the Velocity Indicator for the Sensex Index.

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Below is a review of the Sensex Velocity Indicator.  In this piece, we’ll examine prior comparable “peaks” to determine potential downside risk.

Review

1. September 2, 2020: “If the BSE returns to the last moderate peak (34% in attached chart), then it would bring the index to 49,704.30.” link.
2. September 2, 2021: “The current rise is running out of energy.” link.
3. September 21, 2021: “The Sensex has reach a point of exhaustion based on the historical precedent established in 1994, 2000, 2004, 2006, & 2010. This doesn't mean the party is over, as the prior years prove. Just that there will be some temporary churn or downside risk from this level.” link.

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In the last comparable period of increase in the Sensex Index, we trace out the decline from the July 19, 2010 peak to the January 1, 2012 low to generate a potential downside target for the current period.

As we can seen in the July 19, 2010 – January 1, 2012 period, the Sensex Index had a range of 20,917.03 to 15,406.93 or a decline of –26.34% from the peak.  A similar decline would bring the current level of the Index to 45,848.33.

Timing is an issue that most people are interested in.  We have not been as successful with such an indication other than to refer to the last range in time for the same price action.

Below is the Velocity Indicator for the BSE Sensex Index.

For the dates that are listed on the Velocity Indicator, we have outlined the price levels on the BSE Sensex Index:

1988-2004

2003-2021

Observations

In general, the dates provided at the lows in the Velocity Indicator help to avoid the largest declines experienced in the index.  While it is with luck that the market rises, our goal is to avoid, whenever possible, the largest declines.