Tuesday

India Defied Gravity

Post a Comment June 16, 2009 – 3:28 pm |   | Permalink |  Print This Post |

India’s NIFTY defied gravity and actually was up (!) right before market closed. This may be concerning since the Dow fell the most in a month (which is not hard to do considering its been up up up for 8 weeks). Concern is if Dow goes up today (statistically more likely after a preceding down day), India will start heading up again. Looking at the chart, it is not a question of if but when. Sure, it could head higher (even to 5000!), but sooner or later it will come back down to this level. That said, we did say the same about the Dax when it was at 4500 and later at 4700, but luckily we did not follow through with a position. This is exactly why we started TheInflationist - there are numerous websites making SO MANY calls, giving a myriad of probable scenarios and subsequently crediting their calls when one of their calls prove correct. Here we let our trades do the talking. All the noise is cut out - we may think the Dow may do X or Y today, or Gold may go down, but if we do not take a position it means we are not convinced enough to put our money on the line! 

Tomorrow the NIFTY should see some resistance at 4600 +/- 20 points. We went crazy in our personal portfolio and opened 400 rupees/point short at 4580 Monday, and closed half today at 4450, and the other half at 4510 (just to make up for our unrealised losses on our existing shorts). Note: For the record, we do NOT include this in our public portfolio. Our plan is to short the NIFTY if it heads up to 4620 tomorrow (about >2%). 

The Dow should move up first before going down further. We will look into going long in the Dow if it falls significantly.