Here’s a closer look at the chart I posted yesterday for the Nifty.
The decade long rising TL was broken and retested, a test which failed resulting in the index losing 2500 points in a month.The TL was tested again to the upside and the index took over 3 months to rise above it this time.As can be seen, the test was successful this time and the market rose.
After a good 2009, for the bulls, the bears are calling for a repeat of 2008 for the year 2010.From the chart above the odds of a crash happening anytime soon are slim.We are in a cyclical bull market and the credit markets aren’t even close to signalling any kind of a dislocation in the near future. Sure, we are due for a correction and we should have one anytime now, but it would be just that, and one which should be bought.
The excess money provided by central bankers would find a way in some sector in the coming months leading to another bubble. In 2000 it was IT. In 2008 it was real estate.We’ll have to see what we have come 2011-2012.Inflation would rise as the liquidity ( caused by the likes of RBI, FED printing money in 2009) makes it’s way into our lives.
I’ll leave you with this chart I was emailed sometime back in 2009.