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JungleLion,

Thanks for attempting to reply - You have skirted answering the question and instead asked me to give a timetable for 'death' ??? What is the connection between the two I fail to understand. Your response to my query is as vague as your post. I can make a statement that one day there will be a terrible earthquake or a big tsunami that will cause massive destruction, and then leave the timeframe open. Anyone can make an open-ended prediction, and will never be wrong.

Also, you are mixing up your opinion and beliefs as fact. Fact can be proven - so do provide some evidence to your assertion, besides negative rates, or else, do give a time-frame within a period of months for your prediction to have any value .

Re. SNB negative rates, there are many other central banks with negative interest rates. And yes, the point is taken that Central banks want to ensure easy liquidity and have more money circulating in the system so as to boost the economy and markets. But that does not still give a timeline of market collapse as you envisage. During the 1997 housing market collapse which led to market implosion and losses on a scale of trillions of dollars, the signs of the impeding crash were signalled two years prior i.e in 1995. Many people who took short position looking at the data were wiped off - because their timing was wrong. Happened during the dot com bubble of 2000 as well. Knowledgeable investors who knew of the bubble and were short, lost their shirt, while the dot com bubble made many millionaires of ill-informed traders/speculators.... While you are not advocating a short position (can understand as you cannot know the timing of the expected market implosion to benefit hugely from being short) You are stating it as an opportunity to buy when eventually market corrects.

The point is, the market moves contrary majority expectations. Many traders following some analysis have been remaining short in our markets, which has rallied 1,000+ odd points from the low. So what I am trying to say is that without a timeline (not a date if you can predict within a period of months the point of market reversal, your prediction has value. And I hope that you can either give it, or say that like one cannot predict death, you cannot know the time of market reversal......

DSM, all you say is true, but from what I recall about the markets is that that the interest rates go down in bad times, and are up in good times. So the negative interest rates do not speak good about the health of the economies.

answering your query

in specific words, the gates have opened now, next 8 months will be pure red, no greens.

http://www.zerohedge.com/news/2016-...rket-most-overbought-2009-yet-most-short-2008

Furthermore, as we have been reporting for the past 2 months, the "smart money" clients of BofA have been consistently selling this rally, and as of this last week, have sold shares for 10 consecutive weeks,with the selling actually accelerating, and in the last week, during which the S&P 500 was up 1.8%, BofA clients sold a total of $4 billion, the largest since September, and the fifth-largest in BofA history.

Thanks JungleLion,

Appreiciate your reply. So understand that as per you, next 8 months (Upto Nov or Dec) will see markets make lows. :thumb:

My take : Where our markets will head will be based upon :

* Monsoon (Normal monsoon will be a plus for our rain dependent economy. Good rains will boost rural demand, improve growth and help reduce NPA's of banks towards agri sector and ease stress on govt. finances)

* Earning season (Improved corporate earnings will be a plus)

* Global sentiment (Our market will move in synch with global cues)

* Crude/Commodity prices (Stronger crude and recovery in commodity prices will indicate revival of global demand. Weakness in either will stress out banks and national economies)

* Fed rates and Dollar strength (The rate of increase of interest rates in US and the resulting dollar strength will impact the flow of funds seeking returns. Higher rates interest rates in US will suck up the flow of funds from emerging markets)

So in my view, it is not just one or two factors that will determine which direction the markets will be headed. Improved corporate earnings in US too can sustain the markets there, just as Chinese govt. effort to keep the market afloat by injecting liquidity. (Reportedly close to US$ 900Bil+)

BTW, just curious to know what levels you see the markets at the end of the down turn? The high for the year was 7,800. We are now trading down approx. 200 points at 7,600. So what (approx) close you expect within a margin range of 500 points by end of year?

Thanks for your views....

One index - Dow Jones

Sharp drop to 15,600 levels starting within 5 days ending mid May

translate this into any metrics of your choice.

I have given you the event and the time table, now its your call to verify its authenticity and trade accordingly. TRADE SAFE TRADE SMART.

JungleLion,

I did check the DOW monthly charts. And if the market reverses, it seems that the likely level it will test is 13,930 and not 15,600. (DOW has already traded below 15,600 level twice this year.

A fall to 15,600 would mean it is only a 11% odd drop, but 13,930 would be a 20% odd drop from the current levels. The critical level to watch is 16,290 from which DOW has bounced back twice - while forming a tail 15,550 twice.

My view is that, on the global scale, China is a bigger bubble that US and Europe combined. Their industrial growth has definitely slowed, and the fact that they have to resort to liquidity injections, currency manipulation & restricting the flow of financial info, shows the true nature of the problem.

Anyway, since we're talking Dow Jones... if it does reverse then I'm seeing the following support levels on the downside:

16158
15520
14865
14483
14239

If this index does fall then it should stabilize in the 14500 levels... unless another Chinese problem emerges in the interim and causes everyone to abandon ship.

Interesting discussion.... And good to exchange views. In markets, we always speak about probability.... It may be 90% or 10%, but nothing is ever 100%.


Let's consider Crude. Fundamentally, almost everybody was/has been bearish on crude. From a high of US$ 105+, it traded to a low of US$ 26, and was expected to go below US$ 20. However, inspite of global slowdown, excess inventories, Iran coming into the market, lack of agreement among OPEC members, low global demand, US Shale production, etc. etc... crude bounced back to a recent high of US$ 42. I.e almost a jump of 60%. No trader or a fundamental investor can trade basis conviction alone, and has to respect the price traded. The market has a way of proving most people and experts wrong.... And if one has got a fixed mindset, and trades basis beliefs, it is very much likely that that the market will first ensure such traders lose their shirts first before they are proved right (being stopped out and holding no position)

No doubt, there are global headwinds and things look bleak. But a trader must trade basis charts and not with conviction alone - unless he is in know of uncommon knowledge unknown to 99.99% traders alike John Paulson betting against the housing bubble.....

Market crashes (or lack thereof) matter more to investors than traders.

If one were a conservative technical investor in the Indian markets then he would have exited positions around April or May 2015 (1 year ago) based on the chart below. That would have saved his equity portfolio from sizable losses and also helped him bypass the crashes of August 2015 and Jan/Feb 2016.



It's not that hard to do this beforehand specially if you monitor the movement of an index like Nifty alongside an indicator like Awesome Oscillator (AO) on the monthly time frame. AO frontloads quite reliably than other indicators that's why I use it in my investment (not trading) analysis.

To summarize -- AO has been in decline since April last year and is currently at a level that was last seen in late 2012. That was right before the start of the upside / rally / bull run from Nov 2012 till Feb 2015. Right now, AO is below 100 (this can change by the month end but that's another story).

So if "anything" has to happen (new bull rally or continued bear market), then May onwards seems about right.

These are the domestic triggers:

• Earnings
• Monsoon outlook
• State elections

Globally, these are some problems, conditions and triggers:

US -- Slow recovery; manufacturing jobs lost while low skill jobs surge. But if Fed stays put on interest rates then rallies with continue ad infinitum, ad nauseum.

Europe & Japan -- NIRP, ZIRP are not sustainable. Neither will really kickstart credit growth or boost business sentiment long enough to matter. Also, for Europe, if Brexit happens then currency positions & markets can unwind quickly, leading to more risk aversion and spike in gold prices.

China -- Everything in that country is fixed, priced and hedged higher than a commie propaganda on steroids. Lots of unknowns, which is why when a crash happens there, the magnitude of it takes everyone by surprise.