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What is comfortable is rarely profitable.

Did another country adopt bitcoin this morning?

Good morning fam. I hope each and everyone of you has a wonderful day. Quite a pivotal week on Banknifty. Reliance expects to formalise Aramco partnership this year. Vix continues to compress onto lower levels. A broad range of 35300/34200 created on Banknifty in the past week may soon switch to an expansion phase.

Here is something I have been looking out on and may turn out to be helpful for you as well.

A historic pattern seems to be falling in place here. Have highlighted this in the past as well. The index can set out an interesting month ahead. While the Nifty has hit new highs, the Bank Nifty is still quite a fair distance from its last peak of 37,700.

From the last past month contract expiry to June contract end Nifty has been in a positive of about 450 points on the parallel side however Banknifty closed on a negative of 250 points lower making it the weaker index.

IT being the highlight can be a reason for Nifty being so strong. Even after a reliance being on the lower 2.35% range closing mid AGM, Nifty managed to advance 100 points.

Covid-19 cases in India slide to lower levels. The reopening of the economy has not only led to a bounce in growth, but also has propelled many asset prices to the proverbial moon, and the moon is becoming a very busy place.

That is an odd divergence and suggestive that the current calm in markets might not last, especially if previous highs cannot be knocked out, so key to watch for either a broadening of the rally or signs of new highs failing.

After the U.S. economy grew at a 6.4% annualized rate in the first quarter, thanks to the massive fiscal stimulus, all eyes are on the infrastructure deal which seems to have managed to steer the next leg of the recovery for one of the world's largest economy. The news trigger closed S&P 500 at an all time high along with Nasdaq.

The trend has clearly broken and not only in the DJIA but in a number of other indices as well, but so far consequence free.

But note: These markets are so extended and stretched with to a point where the Fed panic even on a 1% dip.

A key recognition that the extraordinary artificial liquidity equation remains in full control of asset prices for now. The S&P500 appears to be simply tracking the Fed’s balance sheet. Since November every new high in the Fed’s balance sheet has been followed by a new high in the S&P and any dip into the 50 day moving average gets bought.

The buy any dip mentality is so pervasive in the firm belief that the market is bulletproof because it acts that way that by the time this market actually does correct nobody will believe it. It could be an expensive lesson to be learned for all rallies end, even the ones that never end.

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