2)When emotions in the economy are extreme, the august- september one extreme fear and May one extreme optimism.
3)Full of news.In September Modi was named BJP's PM candidate and in May it is final that he will be the PM.
4)In September the USDINR was making new highs everyday. Rupee almost went on to hit 70 against a dollar and now USDINR is making new lows almost hit 58.5.
5)The RBI was trading as well. It was selling dollars in September and now it is buying dollars and building up its reserves. It can't let Rupee appreciate significantly since that will hit our exports.
6)In both cases there was a squeeze. In September Bulls were squeezed and in May the bears are squeezed. A significant volatility occurs when either of them are squeezed. Earlier Margin calls got triggered for weak bulls now Margin calls got triggered for weak bears.
Diesel prices increased yesterday. Lpg will increase from next month almost Rs 900 per cylinder, inflation not coming down. interest rate cut not possible. EL-NINO effect will bring low rainfall this year, more costly food items. Geo-political disputes going on(ukraine-russia ,vietnam-china) one big shock will come before mega bull run.
The problem is markets are never valued perfectly either they are overpriced or they are underpriced and now it is overpriced..point of caution is when everybody starts to think all is rosy,modi has come and he has a magic wand and he will change the future course of our country to be honest it is not in his hands..Globally financial situation is very bleak and remember india is a FII owned country..QE in USA a is total failure ..criminal FED printing money and pumping into stock mkt..no real economic improvement in USA..i checked their fundamental data..housing data, pay roll data, employment data, mortgage application. inventory data, so on ..all are showing no improvement or little improvement since 2008 ..many prominent persons even accuse US govt to fudge economic data ..I did my intermarket analysis ...checked currency , index , commodities ...all r indicating same thing>> massive bear attack coming on WORLD MKT.
My targets for Nifty in medium term 6900, 6500 ,6350 and a close below 6350 will indicate this is a hope driven rally and nothing has changed fundamentally. False rallies tend to fade very quickly. Nifty has 10% probability of going and touching 4500 in the medium term. I am very cautious and am a short seller at this point of time, this downfall will be very swift and will surprise us all.
I believe in BUY THE RUMOUR AND SELL THE NEWS. In September MODI was announced PM candidate that should have been an ideal buying point and when the world knows MODI will be the PM there is just 10 % probability that it will rally further.
Markets is defying basic TA concepts weekly RSI is at 77, which means it is in a overbought zone. And my observation tells me that bear markets usually happen when everything is overbought and optimism is at the highest point.
