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A holiday allows me to browse the internet, reading all my favorite blogs. here is a summary:
The Good news
Lakshman Achuthan is co founder of the Economic Cycle Research Institute (ECRI) and he has been tracking leading indicators to identify the start and end of business cycles. When busienss looks up, the stock market follows. Today on CNBC (America) he says that the leading indicators may have bottomed out with stock prices likely to head higher in the next few quarters.
Bank of America Corp.’s chief executive says he expects the U.S. economy to bottom in the second half of this year.
The Not so good news comes next
Lakshman also says that the recessions will come faster and the time of ‘buy and hold’ may be over.
Bill Gross from PIMCO suggests that Equity may no longer be the favorite instrument for investment.
[My Notes: this means that returns from equity will be lower than seen in the previous bull market]
Merrill’s economist David Rosenberg warns you again that this up move is all just a sucker’s rally. In fact, he thinks the market is headed to startling new lows.
My Notes:
The successful trader should be, amongst many things, a dedicated student of history.
Bull Markets do NOT start with a big bang. Therefore, the curent rally may well be the beginning of a new bull market, but as of now, this is not confirmed. Most markets in history have rallied, then gone through a severe decline which was a test of the earlier lows. These tests were successful, meaning higher lows were made.
If a similar price pattern were to reemerge in the current market environment, it would imply a retracement from whatever top the Nifty makes in the current rally, to a retracement of 50% or more in the next few months. The market would then need to hold these lows and subsequently make a higher high. A lot can happen between now and then. Only time will tell. But a disciplined trader should continually anticipate various market scenarios so he or she is prepared for whatever plays out.
Cheers!