Charts: Bear Market Until 2012 - How to Trade It
The global stock market could be stuck in its current bear-market trend until 2012 and beyond, but next year could give investors a strong bear-market rally to trade, Sandy Jadeja, chief market strategist at ODL Securities, told CNBC.com.
Major stock indexes such as the Dow Jones Industrial Average, FTSE-100 and indexes in Asia could all face "major declines, possibly all the way down into 2012, 2013," Jadeja said.
"But for 2009 we expect a rally into July 2009 followed by a decline into October/November," he said.
(Watch the video for a tutorial on finding these patterns in the markets).
The Dow is teetering at a precarious level at the moment and could break either way in the short term, Jadeja said. But the index's charts suggest an upswing is likely, he added.
"We've got a new break to the high (and) we've got a higher low. This could possibly be the change in the direction trend that a lot of investors have been waiting for," Jadeja said about the Dow.
"This is possibly a very good set up … maybe stocks are cheap right now and this could be a good timing point to get into the markets for a rally into the next year," he added.
Oil prices are also at a critical level, according to Jadeja.
"At the moment what oil needs to do is break above $55.98 to prove to us that there's a significant bottoming here and if that occurs then we could look for a retracement toward the upside," he said.
A break below $40 a barrel could spell a dip toward $37 or possibly even $33, he added.
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