The Truth About the Markets - Everything is stretched and streching

Published: Thu, 12/07/23

I do not remember this kind of scenario so drawing a past experience and overlaying it has not been possible. I am approaching this market on a cycle to cycle basis. By that I mean momentum cycles are measured by the RMI. It remains in buy mode. But some of the charts and data points below show that we have gone too far. In the end a price reversal has to be confirmed by actual price action, we cannot trade data alone. Staying prepared to take advantage of opportunities is what we do but sometimes you have to just wait and be patient.

 

S&P 500 and PCR

The US PCR has come down a lot now on average. Close to the red line that is associated with all the tops made in the market in 2022. So will the same work now? Daily RMI is in sell, so with the recent high as a pivot, maybe its time. We need to watch for additional price breaks like the 20dma.

India VIX

India's VIX closed at a  month high and just below the 14 mark, where many times the VIX has bottomed in the past so its a critical level to go over.

Data supports a cautious view

Bullish or bearish or 'Bulearish' - this is one of the most absurd market setups in a long time. USDINR and Nifty are both near all-time highs at the same time. Nifty Midcap 100 was up for 23 consecutive days [charts below] till yesterday, a new record, with its RSI now at 87, making it quite overbought. There were more Puts outstanding than calls at 181995cr two days ago, the second-highest reading on record. Everything puts us in the proximity of a market top, except that FIIs are not long enough yet in index futures, but their short positions are fully covered, and they ended yesterday with a net long position.

 
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Rohit Srivastava
www.indiacharts.com
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