We are in a bear market
The readers of my column must be aware that I had indicated that the weekly momentum indicators for the indices had already signaled a sell and we could soon see a correction in the market. The recent correction, though a sharp one has taken its toll as many stocks have also dropped below their earlier intermediate bottoms and are in a major downtrend.

In a major downtrend, the next intermediate rise will make a lower intermediate top. The usual strategy that the investors follow is to pick up stocks in a decline. This will not work in a bear market environment as the next intermediate rise will be lower than the earlier intermediate bottom and even if an investor picks up a bottom now, the next intermediate downtrend will take the indices and the stock below the current level. Hence, this must be kept in mind before the investor takes up any fresh plunge into the market.

The usual perception of a bottom does not work in a bear market and investors must currently refrain from picking one.

It is only the defensive stocks which do not take a beating but the best way to make money in a bear market is to fade all rises i.e. to trade on the short side of the market.

With the above scenario in mind, I expect that the investors must currently switch over to trading the market or to stay away from the market for some time till the market bottoms out. Though I will continue to look at a few sectors, I do not expect investors to take up any investments currently. Stocks in many strong sector will also react as they drop into a major downtrend and a decline in these strong sectors is not a buying opportunities as of now. Wait for these sectors to bottom out after a few months and than look for long positions. Today I will take a look at a small group-Plastic Furniture in which a few stocks have completed a double top formation and are also in a major downtrend. Investors must liquidate long positions in this group as of now and book profits as the stocks have dropped below their earlier intermediate bottoms.

Nilkamal Plastics
Nilkamal Plastic was in a major uptrend since mid-1998 and has recently topped out as the stock has exhibited a double top formation. The stock fell below its earlier intermediate bottom on Friday and is in a confirmed major downtrend. The 30 WMA is still below the stock but as the major trend of the stock is now down, it is not going to hold. The relative strength line has been dipping lower and is very close to its zero line and a further weakness in the stock will take the relative strength line below its zero line. The completion of the double top formation gives the stock a target of a minimum of 50 points on the downside from the neckline.

Prima Plast
Prima Plast also completed a double top formation as the stock dropped below its earlier intermediate bottom of 28.60. The stock is now very close to its long-term moving average i.e. 30 WMA and investors must book profits and get out of the stock. The relative strength line is closer to its zero line and is dropping lower and a fall below the zero line will signal that the stock is under performing the indices. The stock's major uptrend lasted for more than two years.

Wim Plast
Wim Plast has already dropped below its 30 WMA and its earlier intermediate bottom indicating that the major trend of the stock is down. The 30 WMA for the stock has flattened out and will soon dip lower. With the major trend of the stock down, investors must liquidate their long positions in the stock either now or in the next intermediate rise. With the major trend of the market also down, the stock will exhibit lower intermediate top in the next intermediate rise.

National Plastics
National Plastics moved above its base price only recently was one of the last stocks in this sector to go into a major uptrend. However, with the market going into a major downtrend and majority of the stocks in this group also dropping below their earlier intermediate bottom, I do not expect National plastic to hold on and will also follow suit. The major trend of the stock is down and investors must be out of the stock.