- Watch those dotted circular yellow shaded areas - Every time Nifty came close to crossing MA(100), it simply could not penetrate it decisively, however look at the last circular yellow shaded area. This time appears to be different, Isn't it!
- Watch McClellan Index - Beginning stages of any BULL market needs a very strong participation of all sectors/industries in the market to sustain the rally. Earlier this year, it appeared as if McClellan Index was turning around, however it could not maintain it. Finally, in April 2016, things started turning around which was reflected in Nifty rally. Remember, McClellan Summation Index is a calculation of advancing stocks vs declining stocks in a cumulative manner, which means as long as more and more stocks are advancing then McClellan index will continue to rise providing underlying fuel to the market rally.
- US jobs report was horrible - If this remains a single isolated event then no worries BUT if similar event unfolds in coming months then that is a sign of coming recession which will spook all markets. BUT why should we care in India about US jobs report? Cause our markets heavily react to global markets, so its better to remain vigilant.
- BREXIT event - Month of July will add doldrums as BREXIT vote will be in and has a potential to send shock waves across global financial world. Euro will have a significant impact on our economy as they are a significant trade partners.
- US FED rate hike strategy - US Fed controls interest rates which affects US dollar and also causes shifts in markets. This in turn affects all other markets across the globe.
- China slowdown - Chinese markets are having a terrible year so far and any further slide is going to cause some effect in our market as well.
- If all goes well then nothing to worry, our BULL rally will continue eventually making NEW HIGH. Actually that will be another opportunity to get in the market for a longer term play.
- If global events spook our market then we shall get the pullback we have been discussing in our past blog post. If we do get a strong pullback then we need to watch the McClellan Index to remain above EMA(59). As long as, McClellan Index remains above or very close to EMA(59), we do not need to worry.
Market continues its BULL rally for now...