In the breathless rush of analysts talking about 6200-6500, the markets have decided to take a pause. The markets were down 0.5% for the week. The markets also remained in our range of 5702-6114 for December. A break of both range extremities looks unlikely for the rest of this year.
1. The US fiscal cliff remains uresolved. What is the fiscal cliff all about? Basically, US has accumulated a lot of debt. The US economy thrives on buy today pay later philosophy. The Debt needs to be brought under control. Typically, when a individual is under debt, he either increases his earings or spends less. The Democrats want taxes to be raised for the wealthy which means increase the Government earns more. The Republicans want more savings by cutting down on Government spending on welfare programs.
2. If there is no resolution by December 31st, taxes will be raised for everyone thereby reducing the amount in each one's hands to spend. This will lead to US ecoomy weakening and that is why the markets are falling down.
3. Our markets are linked to the global markets and thats why our markets are also falling or remaining sideways. There will be a resolution to the US impasse at the last possible minute.
4. This will be a trigger for the markets to rally. When this trigger comes is hard to guess. It will be in the time frame from December 27th to Jan 15th 2013.
5. How does one capitalize on this? Buy every dip for the rally to follow. The downward targets for this dip are 5800, 5750, 5700 and in extreme conditions 5632.
6. There are 2 schools of thoughts in the circle of my analysts. 1 is that the markets will top out around 6300 in the next 2 months that is till Feb end ( I belong to this school of thought). The second is we have a rally till H1 2013 (June 2013) to higher levels and then have a massive correction. In both cases, a deep correction seems likely.
7. The Gujarat and HP election results have resulted in a stalemate. Congress by winning HP have proved the corruption allegations have not stuck and Modi by winning 115 seats has proved his mettle. The status quo continues till the next elections in Karnataka in may 2013.
Let us see how we map the year 2013. The ongoing correction will give us clues to the magnitude of rally in 2013. If its a shallow correction till 5700, then 6200-6300 as the top and a deeper correction expect a bigger rally.
I plan to publish an analysis of the various asset classes for 2012 by Tuesday or Wednesday, stay tuned.
1. The US fiscal cliff remains uresolved. What is the fiscal cliff all about? Basically, US has accumulated a lot of debt. The US economy thrives on buy today pay later philosophy. The Debt needs to be brought under control. Typically, when a individual is under debt, he either increases his earings or spends less. The Democrats want taxes to be raised for the wealthy which means increase the Government earns more. The Republicans want more savings by cutting down on Government spending on welfare programs.
2. If there is no resolution by December 31st, taxes will be raised for everyone thereby reducing the amount in each one's hands to spend. This will lead to US ecoomy weakening and that is why the markets are falling down.
3. Our markets are linked to the global markets and thats why our markets are also falling or remaining sideways. There will be a resolution to the US impasse at the last possible minute.
4. This will be a trigger for the markets to rally. When this trigger comes is hard to guess. It will be in the time frame from December 27th to Jan 15th 2013.
5. How does one capitalize on this? Buy every dip for the rally to follow. The downward targets for this dip are 5800, 5750, 5700 and in extreme conditions 5632.
6. There are 2 schools of thoughts in the circle of my analysts. 1 is that the markets will top out around 6300 in the next 2 months that is till Feb end ( I belong to this school of thought). The second is we have a rally till H1 2013 (June 2013) to higher levels and then have a massive correction. In both cases, a deep correction seems likely.
7. The Gujarat and HP election results have resulted in a stalemate. Congress by winning HP have proved the corruption allegations have not stuck and Modi by winning 115 seats has proved his mettle. The status quo continues till the next elections in Karnataka in may 2013.
Let us see how we map the year 2013. The ongoing correction will give us clues to the magnitude of rally in 2013. If its a shallow correction till 5700, then 6200-6300 as the top and a deeper correction expect a bigger rally.
I plan to publish an analysis of the various asset classes for 2012 by Tuesday or Wednesday, stay tuned.
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