Saturday, July 14, 2012

Dear Bear: Is it GRUMBLE I Hear

SO what do we have as a set-up for sweet short squeeze..Indian markets are showing relatively higher degree of bullishness and it gave a sweet advance signal of coming short squeeze....we had a break out of long term trend line, indices were trading above our daily, weekly, and monthly T_ZONES (proprietary indicator with very long term tests and sustained edge).
But as is the nature of market, it would always keep a bunch of losers ready for its next strong move. We had two back to back gap downs but failed to Bank Nifty below the trend line, but it got enough bears excited to become the fuel for the next move. Hope I m not being cryptic here as to what is the obvious thrust direction.
Bears had good reasons to be excited "as reported in popular media", Europe is imploding, emerging markets are slowing down, equity is looking least bit exciting or trustworthy by any and all standards to common man.
Yields are dropping like stone in developed markets... negative 50bps yield on Swiss bond, negative yields on German bunds (where is all the contingent liabilities...question will come but later:) )...record low on US and Japanese treasuries ...personally i would park there if I m in a hurry and pay the fee but will get out as soon as i find better investment, yield wise or capital appreciation wise........yes sir this is the power of money-flowing to park itself temporarily at any storage cost before it readies to move to its preferred investment.

All this sound like worlds imploding, there is really something that has imploded. Its the trust banking system had in Sovereign bonds as collateral for shadow banking. Private capital in next one year "Will" (yes this constitutes a forecast and we will revisit this theme in upcoming posts) shun low yielding high tail risk Sovereign Bonds and move to private assets

This is going to be the genesis of the upcoming "One of Greatest BULL market of our lifetime"  ...we will revisit this topic in pieces in upcoming posts ....  
 Equities..YES THIS MEANS THAT INDIAN MARKET HAS IN HIGH "PROBABILITY" BOTTOMED.....we will keep a close watch on which sectors could be the leaders in follow-up posts...... Asian Equities including Nikkie..infact Nikkie and Shanghai appears to be making long term bottom,and thus looks really good to speculate......
Commodities...Gold and Silver (I would prefer silver between both if I have to speculate), Agri-Commodities, Natural Gas..follow up posts we will post trading set-ups

Currencies: Yen appears to be making a significant top against lot of currencies...we will keep a close eye on this theme as Indian markets allows speculation in Yen. Dollar also looks overbought and Euro looks over sold, both have enough fuel of trend traders to make a good opposite move

Will posts charts and set-ups for next week trade. But basically get ready to buy junk assets, junk equities, junk debt.

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