Two scenarios for stock market rally

BIST 100 Index has been rising for 40 days. The banks yielded 300% returns. Two scenarios stand out for the course of the stock market.

BIST 100 Index has been rising for 40 days in Borsa Istanbul. The index continues its upward trend that started on July 18. When we examine the returns between July 18 and September 12, 2022, there were increases of up to 300 percent in bank shares. Şekerbank shares gained 345 percent in 40 days. Vakıfbank’s return was 300 percent. While TSKB rose 232 percent, Halkbank gained 211 percent. While the BIST Bank Index was at 2.017 on 18 July, it rose to 4.827 on 12 September. The increase was 139 percent. In the same period, BIST 100 Index rose from 2,451 to 3,627. The average return on BIST 100 shares was 47.97 percent.

What will the direction be?

So, how will the rally in the stock market turn out? How has the situation developed in previous releases? How will the investor act in this situation and what will they pay attention to? Investors are wondering about the answers to these questions. Looking at the data, there have been two rallies since December. The October-December 2021 rally in the stock market lasted for 42 days. The December 2021-February 2022 correction, which took place immediately after, took 50 days. Then a new rally started. The March-May 2022 rally continued for 39 days. The subsequent May-July 2022 correction took 53 days. Currently, the July-September 2022 rally is being observed and has been going on for 40 days. Two scenarios stand out for the last rally that started in July.

Scenario 1: Fix

In the last two rallies, namely the December and March rallies, the rises lasted between 39-42 days. The index has been rising for 40 days in its last move. Within a week, we can enter a correction process that will last until December. The duration of this can be 50 days. There are movements on the basis of shares. After 50 days a new rally starts and takes 42 days.

Scenario 2: Ascension

The rally continues in the stock market and there is a rise for another 42 days. The stock market is always on the agenda. As the index rises, anxiety and anxiety increase. After a total of 84 days of rise in the stock market, a correction takes place.

How should the investor act?

1 Investor should not enter into risky intraday transactions considering the scenarios that may occur in the stock market.

2 Credit transactions and short selling are risky in this period.

3 Stocks with low valuation rates within the same sector may be considered.

4 Shares can reach returns of up to 400 percent in inflationary periods. For this reason, acting patiently in strong stocks will keep the earnings doors open in the long run.

5 Those who have difficulties in choosing stocks may turn to stock funds.

Two scenarios for stock market rally

BIST Bank Index in USD

The Bank Sector Index has risen by 129 percent in dollar terms since July. The index is at 264 in dollar terms. However, even this level is far from the 1.201 peak tested in dollar terms in 2010.

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