Updated: Apr 29, 2021
Hope you all had an amazing weekend. Here is a quick market review and some content I have come up with through the weekend.
While markets have been all over the place so has Covid-19. Things have started to get really frightening and uncertainty has been at its peak levels. Shortages of medical facilities have been the biggest issue. Why so? Because as a country we tend to help others before we could help ourselves.
Lack of disciple and maturity has most certainly bought things to where it is today and will continue if people don't get their mindset in place.
A glance at what the people within the country have done to themselves. Nifty Bank has been looking extremely weak and is currently down 15 percent. PSU banks have fallen the most as the Nifty PSU Bank index is down 23 percent from its peak.
Nifty also seems to be looking for quite a sharp move. The 20 DMA acts as a strong resistance. Long opportunities are far from reach and I see no reason to go long from here whatsoever. The only positive side is from FII.
Is it time for this wide range to meet? Let's not make any bets so soon.
Last week's news of Bernie Madoff passing away in prison at 82 serves as a reminder of false belief systems. Do you know what got him caught? Not forensic accounting, not regulators, not investors, not the Fed or the SEC. But the world’s greatest cleansing process: The tide going out otherwise known as markets going down. His Ponzi scheme may have never been exposed were it not for markets collapsing and his new cash inflows stopping which exposed the facade of his fraud. But people had believed. They had believed that magical returns can come out of nothing. And as long as people believed they kept sending him money.
Belief is a powerful force and humanity through the eons has structured societies around a completely false belief system, but as long as enough people believe something it is perceived to be true no matter how false the premise may be.
And that’s what happens in every bubble. The majority subscribes to fantastical growth and return narratives and they abandon all caution, sense, or discipline and when they get rewarded by their actions rooted in their belief system they feel validated.
$DAX poking far above the monthly Bollinger band has not been the best time to be pressing long. But hey, maybe it's different this time.
Scary right? We're currently witnessing one of the tightest $VIX futures compression channels ever. Expect a spike within the next few weeks. The longer patterns with major volatility spikes historically take about 2 years to break. We may have another year for that bad boy to bust.