Whenever the markets correct there are a lot of headlines giving reasons for the correction !! Above can be a good headline as Global Indices across the world have corrected 10% since February 1st Another nice Tweet to sum it up.
Miles law:Where you stand depends on where you sit
Why is the market falling?
Conspiracy theorists: conspiracy!
— Vetri Subramaniam (@VetriSmv) March 24, 2018
Lets get to seeing global charts
What we notice
- Most indices across the globe are down 5-15% from the peak in February.
- Many are now testing the 200 dema and the previous support zones.
- Oversold on RSI and other indicators alongwith positive divergences.
- A short term bounce is possible in near term.
- Review post bounce whether it can take out recent highs or not.
- Some emerging markets like Brazil , Taiwan, Hang Seng are in strong trends. some others too.
Taiwan – Strong chart in all Time Highs.
Shanghai – Down 10-13% from peak and lower end of the range.
S&P 500 – Retesting 200 dma and 2 year trendline. 2500-2550 major support.
Nikkei – Oversold with positive divergences. Below 200 dma but close to supports.
Hang Seng – In a strong uptrend.
Dow Jones – Oversold and re-testing 200 dma. Down 10% from peak. Major supports at 22500/21000. Time for a bounce ?
DAX – Oversold and at an important support level with divergences. Next supports at 11000. Down 10% from peak.
Canada – Close to retesting recent lows.
CAC – Oversold and lower end of the range.
Brazil – Strong chart and in all time highs.
The Emerging Markets Index fund has not tested the lows of February whereas Nifty/Sensex did break them in last few days and has underperformed the emerging markets index.
- Nifty has gone below the 200 dema and the previous bottom for a day or two.
- RSI is oversold and showing positive divergence.
- The setup seems pointing towards a bounce and even a short term bottoming out.
An older video which explains the RSI oversold strategy - https://www.youtube.com/watch?v=p6WxDxOKGkY and more videos on RSI divergence done in previous years. Alternatively search for RSI on the website and you may get a lot of posts.
Conclusion – Time to look to deploy cash and fresh cash is our view.
Disclsoure - Do your own research – We can be biased as we are now totally invested and looking to deploy fresh cash.
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