- #1 - Very early stages of a possible market TOP, market finds it difficult to stay above MA(100)
- #2 - Confirmation of earlier identified market TOP, as RED line appears to be crossing ORANGE line
- #3 - BEAR market in progress, as RED line is well below ORANGE line
No need to panic, if you are still invested in equity funds then now is the time to have an exit plan. Market might slide further and then try to rebound. However, any rebound will NOT be easy as it will be met with the resistance zone. Considering markets reaction in next few weeks, you will have to make a choice and exit at some point. Its better to take a loss than go into HOPE stage which later becomes hopeless stage. Capital preservation should be our TOP PRIORITY.
What does it mean for our Investments?
- Mutual Funds - We got enough warnings to exit market and by now we should have exited equity funds and if you haven't done so then its time to re-think your strategy. Also we had enough time to research debt/bond funds (as explained here). However, somethings have changed in last two months, rupee is depreciating and Foreign Investors are exiting bond markets. Outlook is NOT looking good for now in equity as well as bond/debt markets. Instead the best place to park your money now is liquid funds and do some homework on commodities funds (especially precious metal funds such as GOLD ETFs).
- Stocks/ETFs - When market is not doing well, individual stocks have hard time too hence it might be in our best interest to stay in cash or have a strict STOP LIMIT in place as well as take partial gains.
Market in BEAR trend, beware of further downside ahead...