Why does it look like 2008 again?

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Dear Investor,

Why does it look like 2008 again? This is the question jumping in my mind when I scanned all my favorite charts on weekly scale. I have printed few of those below. If you closely observe each chart, you will find that some 2008 patterns are emerging in these stocks. This is the case with almost 80% of stocks I watch.


I do not mean to scare you away or predict a crash is coming. I want you to be aware that there is a similar situation getting developed even though market is moving higher. Only 20% of stocks in NIFTY like Hero Honda, Siemens and ACC etc are moving the market higher. Rest of the stocks are lagging.


My intention to write this blog is to educate you to read the market situation. Market makers are the smarted breed of people working to take money away from excited emotional investors. Don't you understand already that stock do not move because they are good or bad. Stocks do not move because they are making good money or PE ratio is low. If that is the case, then stock should move only 4 times in a quarter. After earnings. But that is not the case. Stocks move up and down every day. They move on emotions and emotions only. Learn this. Learn this well, if want to walk out positive.


Some people buy as soon as the stock drops. They think it is cheap now and the stock becomes more cheaper later as happening in case of Bharti Airtel and Reliance Communication. You need to learn when to invest instead people just push money and wait for things to workout. This strategy has worked well in bull markets where everything just goes up so no need to think.

Today's situation on superficial level looks like a bull market and when I scan the charts, I see stock breaking down. Look at any sugar stock, they are going down. Will you buy those because they are cheap. I don't think that is wise. In fact those are at perfect short point.

any way, long story short. Market is making new highs, that is bullish. But many stocks are breaking below 21 week line as you can see. 21 week line is similar to 150 day line of daily chart. Watch your money and be extra cautious in coming earnings season rally.


Learn it before you earn it.


Closely look at the NIFTY weekly chart now and in the 2008. The pattern looks similar. If we are able to break 5500 then I think we will rally lot more. Current situation does not look like that to me. See the point is, I see emotional outburst missing. I do not see people are buying like crazy. I do not see people betting all their money on a single stock. I do not see those kind of frantic actions and that is the reason we will not breakout just like that. That madness has to come to break big resistance of 5500.



Doesn't this chart look similar to 2008?

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Thanks
Anil
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