Nifty is at the top of the bottom slopping trendline lets see if it breaks it. The horizontal lines are historical resistances from past year and current year where a breach of a level is failed by more than 5 times.
Here is the chart:
As expected Nifty never breached the top of the trendline and continued to slip down since open.
How easy it is to create a bubble:
Imagine a stock priced at Rs 100 and having a market cap of Rs 10,000. One day a fund decides to buy 5% of the company at Rs 120 per stock and thus pays Rs 600 towards the purchase. On seeing this transaction, other shareholders would be reluctant to sell their shares below Rs 120. This in effect would now make the new price of the stock as Rs 120 and push up the market cap of the company to Rs 12,000. We hope you have noticed the magic of the modern monetary system. A monetary transaction of Rs 600 has pushed up the wealth of investors by Rs 2,000. Thus, the overall wealth has gone up by 2,000 while the money involved is just Rs 600.
It should be noted that a similar magic was behind the creation of the biggest bubble in history. The US real estate bubble or what is now popularly known as the subprime bubble. All that the US authorities had to do was encourage a few more housing transactions so that prices could be pushed up. Thus, interest rates were lowered and more people were brought into the housing market. It should be noted that if prices for even 5% of the homes went up, the remaining 95% would also witness a similar rise in value and thus, overall wealth was increased.
Source: equitmaster
If dow breaches yesterdays high expect a few days of rally and a close above 10,000 would not be a surprise. The downside target is at 9585 this was the dow future level in Asia on Tuesday early morning before good news from Aussie land came out.
Today's dow levels buy above 9760 for a target of 9850 first and then a close above 9850 will bring 10,000. Sell below 9685 for first target of 9600 and then 9300.
The death cross happened on S&P yesterday Dow is a day away. Lets see if that helps make a significant move. For me Now a move above 50 DMA is a time to go long - long term and not trading wise on the dow. If too many people know about death cross it means nothing hence I wont consider it anything but a technical event.
However, Gold is looking bearish now far too many people coming out and being positive about it, Volumes have picked up in the futures contract and I think 1265 is a major top for a while and may stay here. This is similar to december when Gold made a top at 1200 and then fell to 1050 levels. Similar levels of fall maybe expected here.
