It has not really gone down much in INR, more of a time correction.
No one really knows how long markets will remain like this. Quite boring, would prefer them to fall and rise rather than stay flat.
Anything can happen irrespective of what i or anyone says. In the very long run as we know, markets go up.
With that out of the way, the guy i learned trading from has a pretty bearish outlook ( not position, that is done with TA ) for next few years for US markets. This is not short term outlook which can be bullish too, and he was bullish recently. New highs can always be made. He probably looks at many things for this but one of it is yield inversion which has high reliability in predicting market stress. But its not immediate, many months might go before something happens. And nothing is 100%
If that happens, perhaps some of that will affect us too.
A consolidation base can be both a continuation base (usually) and also a reversal one. For the moment it seems more bearish to me. We had a very nice monthly bull flag that failed and since then we keep selling off lower highs. This was slow, but seems to have accelerated a bit now. Equity participation has increased, people probably expect too much post covid recovery. Markets tend to test everyone, so makes sense to test all of the people who might be overweight equity looking at short term past. Lot of new SIP guys can come under stress. We have not really had a bad news flow + falling markets for some time now.
Shorter term, markets did not bounce yet after monday fall. This might develop into a bear flag if we stay like this. Structurally this looks like a good flag to me. Anyway, patterns fail all of the time, so don’t take this as any kind of prediction. We cant really predict outcomes. And must change view as new info comes. For long term investor all of this is noise.
Traders can win and lose in all kind of markets. trend following ones generally do well when range expands and suffer when it contracts. Also strong out performance is generally followed by difficult times.
Yes, my trading systems don’t target range bound markets, but last few months were ok in individual stocks. Adani helped. Still boring movement to me, very few trades on many days. But it might start expanding now, lets see.
Option guys can add systems that do well in sideways markets, something i will try in a year or two perhaps to diversify ( if i can manage).
Do you change your asset location, if any, allocating more to debt, sovereign, gold etc, considering the low payoff in range bound markets, with effort being the same, or you try to find any opportunities in any segment or sector that is relatively better performing than others?
I am not investing anymore, 100% trader. All equity sold off. Only use debt funds to pledge.
I don’t think we can easily predict future market conditions outside probabilistic outcomes. If i was investing, then anyway returns expectation is low. So instead of wasting time, keeping things simple would make sense. Just diversify into things that you like and reallocate say every year or if they deviate a lot.
From what i have read ( but not tested), Long term gilt say 10Y works well with equity most of the time. But does not make sense when rates are abnormally low like in covid times. Gold, if you are comfortable with it, i think has slight negative correlation with equity and for Indians adds some hedge against USD appreciation too. Sovereign bonds might make sense as they give some extra interest on top of gold returns. Obviously have some in short term debt for immediate needs. Perhaps diversify to markets outside india too for equity. This probably should be enough. Can look at Ray Dalio all seasons funda for ideas.
Active investing i have not done yet. A hybrid style might work, Jason seems to be an expert at this here combining investing and options for some very high returns.
For trading, i just use tested signals and don’t look at market environment much beyond some system specific filters. At its absolute core, rules are very simple just one or two conditions that have most of the edge and any thing after that is just refinement and risk reduction. Stock universe is more or less decided by liquidity. We cant move that much intraday without slippage becoming an issue.
For nifty, i think price wise nifty should not fall more than 16750 to 16600 or it will go into deeper dive of maybe 800 to 1500 points.
Other scenario maybe it go up from 16800 or 16900 crossing 18000 in his way or it will consolidate in range of 700-800 points for upcoming weeks.
Right now it looks in condion where no firm decision can be made. In Situations like this, avoiding long term positions is safe play.
For nifty to go up, i think there should be somewhat big news which can impect markets positively to such level that they starts going up. Otherwise, bearish traders have already ordered note counting machine to count there money
Nevertheless, price is price, be always ready to be surpriced!
Yes for sure, chances are greater that market will go up sooner or later from this level. What you think about swing, will it help trading in such kind of consilidation market till real trend rally not comes?