1. In stock market nothing is guaranteed and if you want guarantee then invest in Fixed Deposits
2. We are measuring probability (confidence level) and NOT guaranteeing anything, and probability tells us that path of least resistance is moving DOWN and NOT moving UP. BUT WHY?
a. McClellan Index continues to drop below EMA(59) and MA(100) suggesting more stocks are declining and less stocks are advancing
b. Nifty is below MA(50) and MA(200) which is considered bearish
c. One might argue that both a & b were true even in April of 2013 so whats the difference now? The difference is McClellan Index had just started its descent back then but now it is in a confirmed downtrend
3. Can it still turn around? Absolutely YES but the probability is low
What does it mean for our Investments?
- Mutual Funds - If you are still invested in Equity funds then time to have a exit strategy and shortlist good bond/debt funds. Wait for next bounce (probably in 3 months) and that will be your opportunity to EXIT. You may want to check out our earlier post which talks in detail about how to select debt funds.
- Stocks - Its better to stay away from market and if invested in stocks then have a hard stop limit in place to avoid massive losses.