Thought for the day
"If you reveal your secrets to the wind, you should not blame
the wind for revealing them to the trees."
-Khalil Gibran (Lebanese, 1883-1931)
Word for the day
Quidnunc (n)
A person who is eager to know the latest news and gossip; a
gossip or busybody.
(Source: Dictionary.com)
Malice towards none
Sheena
Bora's tragic death may inspire someone in Bollywood to make a film on her
life.
What else?
Peace broken!
Both the benchmark indices witnessed their first larger than 5%
daily move after 6years. The last time such move occurred was on 6th July 2009.
It surely is not an ordinary event. The argument that it may be an isolated
occurrence is not acceptable to me.
Historically such large moves have never occurred during peace
time. One thing therefore is sure that the peace seen in the market since 2012
has been broken. We are most likely to witness higher volatility and more such
large moves in the market in next few months.
It is also true that such large market moves have occurred when
market was in the process of forming either a top or bottom.
It is therefore important to analyze what the market is doing at
present.
The current market rally began in January 2012. In this rally
Sensex has moved between 15358 and 30024, making higher highs and higher lows
every year.
This trend will be broken only if (a) Sensex breaches 19963 (low
of 2014) in next four months or (b) fails to trade over 30024 (high of 2015)
next year or (c) trades below low of 2015 in 2016.
Considering that (a) at present the yearly range of Sensex
movement is even much smaller than most peaceful 2012 (28% from yearly low to
high vs. 19% in 2015) and (b) under current circumstances it does not appear
reasonable to believe that Sensex may scale levels much higher than 30k within
2015, I am inclined to believe that this large move marks the termination of
the rally seen since 2012 and beginning of the process for bottom formation for
a fresh rally. This process may take 6-9months or even a little longer to
complete.
The bottom may occur between 50% - 68% retracement level of the
entire rally from 15358 level implying a bottom between 20-22K Sense level.
My trade at present therefore is to sell on rise.
For those who got excited by rallies seen in past two trading sessions it
is critical to note that during 2008-09 there were 51 daily up moves of more
than 3% and 58 down moves of similar magnitude.
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