The talk from the just concluded trading week has been the fall in the US indices in the past two days and suddenly you had bear blogs which were blown to extinction pop out with comments and analysis and the proverbial ” we told you so..”. Never mind if the “we told you so” have been wrong over a 100 times in the past one year!
Don’t get me wrong. I am not a bull or a bear, and this blog sides with neither.We trade the market both up and down without getting emotion in the way of up or down prices.
That being said, let’s take a look at what lies ahead for the markets next week.
I’ll want to take a look with you, at the fundamental side as well as the technical side for the short term.If you have been reading this blog long enough then you would know that I count for a perspective on the fundamental side of the economy on none other than our favorite Baltic Dry Index ( BDI ).For the technical side there is none better than the NYMO.
To see if the fundamentals have been deteriorating, let look at the BDI.You can catch my last post on this subject here
Certainly does not show any signs of pain or a deterioration. On the contrary it is nearing highs.
Now a look at the NYMO for the technical picture.
As you can see it is extended and ready to move up again.
Just in case you have forgotten here is the co-relation again :
With the Vix at levels of 40 thereabouts,there will be volatility for the next 2-3 sessions which can swing big, either ways.Such an environment is ideal for day trading and you should not miss out on the opportunity.
Also a drop in the Nifty from 5400 to 5000 constitutes a 9 % correction which is fairly normal in a bull market and well within the 7-13 % expected range.
The charts above show that the bottom is near.