https://ganninsides.com/2024/08/20/nifty-update-361/
“This week is particularly crucial for NIFTY. As I previously discussed, to sustain the bullish momentum that began in January, NIFTY must reach a new high by either August 26th or 27th. If a new high is established by Tuesday, the underlying structure will remain firmly supportive. In such a scenario, any pullbacks, regardless of their severity, will likely be bought, and the uptrend will continue indefinitely or at least until the current momentum loses its strength.”
Let’s observe market movements during the first half of this week. Technically, markets are positioned for a new high. However, if this high occurs after the 27th or 28th, it might not be as bullish as it seems.
As mentioned earlier, the major trading opportunity is expected in the next two months of September and October. It’s advisable to be prepared for this event.”
Major support for NIFTY lies in the zone of 24,500-24,600 on spot. As long as this support zone holds, we can expect further higher highs in the near term. Time-wise, we have a minor cycle date on August 28th and the major cycle date on September 2nd. The major move I’ve been discussing would likely kick in after this cycle date of September 2nd. That’s going to be very interesting for all of us as traders.
“Honestly, we haven’t reached a point where we can confidently defy the current market trend and make significant profits. There’s a specific time for such bold moves, and right now isn’t it. Until that opportune moment arrives, it’s wiser to focus on the current bullish trend. I’m sure many of you recall my contrarian stance in late July, when I strongly suggested taking bearish positions. The market’s subsequent behavior was truly remarkable to watch and trade. Similarly, on August 5th, when the market was experiencing a sharp sell-off, I clearly stated that if the downturn were to intensify, all indices would need to break below the intraday low of that day.”
https://ganninsides.com/2024/08/05/nifty-feels-the-heat/
“A failure to break below the August 5th low would likely have led to a pullback across all assets. However, as anticipated, Indian indices held above this level, and markets experienced a significant recovery.”
“When discussing a historic recovery, it’s important to consider the recovery in U.S. indices as well.”
In my earlier posts, I had shared targets of 5200 and 15800 on S&P and NASDAQ, respectively. The indices tested those levels and staged a very smart recovery. A retracement was certainly expected, but we were not expecting a fresh high. Although fresh highs have not yet been printed, S&P has almost reached there. NASDAQ is still at some distance from its high. So, during the next few days, we will have to monitor both these indices very closely. Because if S&P manages to make a new high while NASDAQ fails to make a new high, that would trigger an inter-market divergence, which again would not be a sign of a healthy market.
“The S&P 500 may face resistance at 5675. If this level is breached, a further rally toward 5800 could ensue. For NASDAQ, the July high of 18671 could act as a resistance level. NVIDIA’s earnings report on Wednesday evening could be a significant market mover.”
“Markets have recently become more sensitive to fluctuations in the Japanese yen. I discussed the significance of the yen and the carry trade concept in my previous posts in late July, just before the recent market volatility.”
A yen value below 144 poses a significant risk to all risky assets. If the yen sustains below 143, it could trigger margin calls globally, leaving little time for market participants to react. This could lead to a rapid decline in market values, potentially resulting in a 10-15% loss within a few days. Technically, we anticipate a potential decline to 135 by January. If this level is breached, we could see further weakness, potentially reaching 120 by late 2025. Additionally, a break of the August low in September would be a particularly negative signal for equity markets. Therefore, it’s crucial to monitor the yen closely.
Along with yen Equity markets would be kept under pressure from falling intrest rates as well.
Yes you read that correct.
Lets discuss key points below
One of the primary concerns is the potential for inflationary pressures. When interest rates are lowered, it becomes cheaper for businesses and consumers to borrow money. This increased borrowing can fuel demand, leading to higher prices for goods and services. Inflation erodes the purchasing power of currency, making investments less valuable in real terms. For stock market investors, this can translate to lower returns and a decrease in the overall attractiveness of equity investments. In addition, interest rate cuts can have a negative impact on the banking sector. Lower interest rates reduce the profitability of banks, as they earn less on their loans. This can lead to a decline in lending activity, which can hinder economic growth and ultimately harm the stock market. Moreover, a weaker banking system can increase systemic risk, making the entire financial system more vulnerable to shocks.
While interest rate cuts can provide a short-term boost to the stock market, the long-term consequences can be far more damaging. The potential for inflation, moral hazard, and banking sector instability outweigh the benefits. Investors should be cautious about relying solely on interest rate cuts as a catalyst for stock market gains. A more sustainable approach to investing involves careful consideration of underlying economic fundamentals, company valuations, and the broader macroeconomic environment.
thats it for now.
will sign off for now by wishing everyone a HAPPY JANMASHTAMI
gann,insides 