This market needs to get close to 14,000 but expect an intermediate bounce: Jai Bala

“These days fund managers are diversified into even cryptos, they come back to offset the losses sustained in the crypto markets in other asset classes. So, that way, it has a little bit of spillover effect,” says Jai Bala, Chief Market Technician, Cashthechaos.com.

Just wondering when is this selling going to stall and unfortunately, US Futures too are tanking!
That is true. India futures have broken below the March 2022 low. So, this marks a fresh low for Indian markets. When it comes to the spot it will be ideal if it went below the March lows so after that we can have a durable bounce. But once again that will be just a short term bounce rather than start of or the redemption of the uptrend. As I have been saying since November, this market needs to get somewhere close to 14,000 before we can think of the bull market that started in March 2020 resumeing. So until that point, more pains are ahead but we will have an intermediate bounce one more time which will be a little bigger than what we saw between May and June.

Last time around when we spoke, you said that there will be a lot of bad days on Dow Jones and Friday was one such day. The futures right now are indicating a 600-point decline. You think we are closer to the low as far as S&P is concerned or is S&P also breaking the May low or it means something else?
I did not expect the S&P Futures to break the May low. Last time I said it will come close to the May low but hold it. If it does not go too far below the May low, then that pattern that I was envisaging still holds.

But in the medium term, it still has to do a lot of work on the downside. The question is because of this break, is it translating into something sharper than what I had anticipated earlier or does the integrity of what I had said last week still hold which we will see in the regular session of the US market.

If it does not go too far below 3800 on the S&P Futures, I think that is still a possibility but the US 10-year yields have broken into fresh 40-year high. That is not a good sign as usually Nasdaq has a negative impact whenever the US 10-year yields are rising.

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Do you track cryptos as well? Will the selloff in cryptos have a cascading impact on other asset classes?
Yes that is true. Cryptos are more like a windsock of animal spirits, nothing beyond that. But because these days fund managers are diversified into even cryptos, they come back to offset the losses sustained in the crypto markets in other asset classes. So, that way, it has a little bit of spillover effect. I am not too much into it but it is just a signal of how the overall sentiments are. I would not treat it much beyond that.

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