SGX Nifty 13th July 2016

PLEASE NOTE THAT THIS IS MY OVERALL VIEW ON THE NIFTY AND THAT
DOES NOT MEAN PRECISE ENTRY AND EXIT POINTS WILL BE MENTIONED IN
THIS POST. IF YOU ARE TRADING ONLY ON THE BASIS OF THIS POST PLEASE
USE APPROPRIATE RISK MANAGEMENT AND THEN ONLY TRADE. PLEASE DO
NOT OVER TRADE.
SGX Nifty / Nifty Futures today continued rallying and touched 8525 spot Nifty levels. We did
a mistake in analyzing the last part of the current on going diametric and we did issue some
adjustments to our positions accordingly a few days back. We did take a partial hit during that
process. Although our trade was not well managed we are very clear on our larger wave counts
and we do see Nifty ending the rally that started on 29th Feb 2016. As per our analysis we expect
the resumption of the bear market that started on 4th March 2015 from around 9119 levels. The
current structure and the overall wave counts as per our analysis does not indicate any sign of a
tezi / bullish cycle. We do not see or concur with rest of the market that Nifty is headed for new
life time highs or we do not concur with most people on the street that this is a bull market
playing out. If you are following or reading this please note that we are sharing our views here
and that does not mean that I am God or I will never go wrong. The past 2 months are a
testimony to my misreading of the final leg of the diametric and hence if you are following or
trading based on our Nifty view then please note that you need to manage your own risk.
There are way too many danger signals in our systems that are consistently showing up signaling
a massive bearish move to resume and during that move we will see significantly lower levels to
enter into buying positions. The risk reward as per our analysis is not in favor of buying at this
juncture, rather risk reward has not been in favor of buying for the past 300 points, buying had to
be done at lower levels of 7300-6800 which we did and then booked out around 7900 levels.
From a investors perspective we are now only long in a few select stocks and we do not see any
sense in buying or trying to catch the on going rally as it is on a unsustainable trajectory. The
Banking space looks very dangerous to us as the valuations in some of those stocks have almost
reached within striking distance of Jan 2008 valuations. Everyone reading this will be aware
what happened next after those valuations were reached. In addition of the valuations there are
extreme divergences clearly visible on the charts and that too is a sign of resumption of the main
trend that started on 4th March 2015. VIX index too shows extreme complacency as of now.
Given the global back drop we do not see that VIX will remain where it is now for long and that
in turn will also indicate a change in trend. Bond prices are another major indicator that we look
at and that too is indicating that currently we are on a unsustainable trajectory. In the coming
days we see a massive bear market to resume. Gold, Silver have given medium term breakouts
and we did trade longs in Silver and make good money. The sharp rise in silver and Gold too are
indicating that many in the smart money community are shifting asset allocation to metals. That
too is a sign of risk off in the coming time.
Good Trading To You!