Tuesday

Hold on tight

Bears are folding everywhere we look. As bearish as the headlines are (bullish sign), we see perma bears giving in citing technicals pointing to a short term relief rally. Based on our indicators (refer to yesterdays post “Caution” for charts), we see danger right ahead. The acute rise in our indicator is a very bearish sign. It may take a few notches higher, but its a matter of days now. Yes, a broken clock is right twice a day. Call it long enough and you will eventually be right! Well, our time is coming soon. So hang on tight. Every indicator of ours is flashing short. It takes discipline to follow ones own analysis - our fellow bears are closing their positions and some even turning bullish. A big rally up will no doubt inflict ALOT of pain. We received daily emails from readers who have (foolishly for now) followed a few of our trades asking “is this going to come good?” and “should we throw the kitchen sink into this trade?”???!!! The market IS insane at the moment, not because we are bias and its going against us. Our charts posted yesterday show that markets are infact in a VERY extreme position. The Dow’s absolute level does not show it. After all, its quite far from its peak. Unfortunately we are unable to disclose much on our indicators. We don’t expect anyone to have blind faith on something they do not understand. Instead we will just continue to trade based on them and let our portfolio speak for itself. In hindsight, HOPEFULLY readers will see its predictive value.

We see a few visitors from India - welcome. A note of warning, India’s NIFTY will be taking a BIG hit soon! The profits from going long are definitely not worth chasing. Pass and give it to the next trader. IF you have not shorted, then you are in a position a hundred times better than us (to be exact about 330 points as of NIFTY 5300). At best, the market will be where it is in 6 months time. We are calling top (AGAIN).