At around 4.00 pm IST, the Chinese Central bank lowered reserve requirements.Our Nifty had closed by then and with a Blue OrderFlow ( God bless that analyser), but during the day we had noted several things which spoke about something being amiss in our markets before the close. That move by the Chinese sent the US futures from 1190 to 1208 in about 15 minutes.
Less than an hour later, the US FED increased it’s swap lines with foreign central banks majorly from Europe. That sent the futures further up from 1208 to 1228 in about 10 minutes. The rest of the day that market stayed in a 15 point range. Clearly shorts were fried.
This morning the NSE opened around 4978, up 140 points from the close but has remained in a 30 point range since.Again a case of shorts moving out, but can the buyers move in?
Globally we are seeing an effort by central banks to increase liquidity.On the face of it, the reason the shorts moved out was that they recognised that a global concerted effort was another indication that the famed printing presses are moving at full pace and this is another “Stealth QE” for the globe.That’s why I keep mentioning that shorting a market is always difficult because any day you can have the full government machinery rolling against you.The government will never come in the way of a soaring bull market.
Anyways we are tracking the Euro crisis at this link here : http://online.wsj.com/article/SB10001424052970204449804577068932199637016.html?mod=e2tw
The recent efforts will mean a possible move to swing highs in the short term.Whilst it’s a short term victory earned and a few Lehman’s avoided, I have no doubt in my mind that this new liquidity will increase global inflationary pressures which means that we here in India will not get any respite. View that against policy paralysis and India does not look that great a story anymore.
Back to the markets, we are looking for further clues to see if the markets can rise higher. Remember it is not in the news, but the reaction to the news that is important. Tomorrow we will look to see if the market can rise higher. The weekly bar trend would certainly move upwards.We are also a bit early in the daily cycle and this move should play out till December 6th when the next half cycle low is due.