A Relief Rally, finally

After six days of volatility, the Nifty gave an impressive performance today, gaining almost 150 points to close at 4160. The Index had made a pivot low at 3850 last week. Since then it has held on to this low. Six days of volatile action also created a trading range between 3850 and 4100. The Index today successfuly broke out from this range, closing above the 4100 resistance. Based on the width of the trading range (4100 – 3850) we get a target of 4350 for the Index.
This is a bear market. Even bear markets should see corrective rallies. The current up move is one such rally – call it a relief rally.
It is possible that the current rally may continue and could in fact be the first leg of a new bull market. After all, in this world, anything is possible. But, we have to wait for a pattern of higher highs to say that the bear market is over. Such a pattern will emerge if and when the Nifty moves above 4350 and also closes above it.
Investors should wait for the first signs of a bull market – higher highs. As explained above, this will occur if and when the Nifty moves above 4350.
As I write this, Bloomberg says:
Profit at S&P 500 companies declined 11 percent on average in the second quarter, according to the average estimate of analysts surveyed by Bloomberg. Income is projected to slump 60 percent on average at financial companies.
It does apear that similar news items will eventually appear in the BRIC nations, specially India & China. In India, bear markets last for two to three years. We are just six months in such a market. I assume there is much more pain ahead.
The chart for Crude Oil suggests that a pullback to $121 is possible. Why 121 ? A 38.2% retracement of the current up move brings crude prices to $121. Such a pullback will be normal. The bull market in crude will NOT end if it corrects $25.

The Samajwadi Party says it is supporting the Congress Government without expecting anything in return. Mr Amar Singh, the Samajwadi party spokesman said this.

“SOMETHING FOR NOTHING”
Words by Neil Peart
You don’t get something for nothing
You don’t get freedom for free
You won’t get wise
With the sleep still in your eyes
No matter what your dreams might be