Sensex Bottom and Rise

image courtesy: indiabulls

(image showing the hugely negative MACD, thereby implying that the trend is still negative inspite of good rallies)

Its nice to be right ! When you predict that the markets are going to go a particular way and markets oblige ! If you see my previous posts on 27th October and 11th October, both predicting an upmove, we indeed went into an upmove from the very next day... Actually in technical analysis it is much easier to predict the short term bottoms than to predict the tops...so it was not too much rocket science predicting the bottoms...but yes it indeed feels nice, to be a good student of the markets...

If you notice that most the upmoves and downmoves are based around the series of F&O. So once the series are over on the last thursday of every month, the positions are cut and new positions are built, which I am sure have a lot of role to play how the markets behave in the next series. For e.g. once this series got over on Wednesday we have started our upmove...and this phenomenon is noticed across many series as well...a word of caution though that in many series a trend that starts at the beginning of the series gets reversed after the first 5-6 days!!! 

So is the worst over? Well its very difficult to answer it...if you read the newspapers or hear the experts on TV, all of them seem to be indicating that the worst is yet to come. However what I am worried about is some of the statements coming from the worlds leading institutes predicting that the worst might be over for the developed countries but the worst is yet to come for the emerging economies!!!

From an index perspective, we still are in a negative trend!!! and it will take a lot to get out from here...infact we cannot say that we are out of the woods till such time we test the bottoms and the bottom holds....now with the RBI's move of cutting repo rate the markets are expected to take the cue and rally for some time, however till the time we are over 3100 on the Nifty we would not be even in a small uptrend...so these small sharp rallies need to be played but played with a lot of caution...infact I think its a nice time to rejig ones portfolios and start building some nice solid portfolios, that would give long term results. For e.g. in my previous posts I had written about TISCO, which was trading at crazy valuations at 150!!! This would have meant that if one would have picked TISCO at 150, he / she would have got 11-12% risk free dividend income throughout !!! no wonder that it bounced back 40% from those levels within a couple of days (as such valuations do not last for long). So its time to enjoy the uptrend as long as it lasts, and perhaps hope that the levels of 7600 are not breached, if and when the markets come to retest the bottoms!!!