Based on the monthly RSI, we see the all time high on the RSI was in September 2010 at 91.5 points, when the Index just went over 7000 points. There onwards as we know the ASI peaked at 7800 points in February of 2011. The market crashed for the rest of the months till June 2012. Before the bottom of the ASI the RSI had fallen to 39 points. There onwards the market rallied, and the RSI went higher a little over 70 points, funnily enough again till September of 2014, when the ASI was over 7200 points. As we know the ASI went up to around 7600 in January of 2015. RSI thereafter kept on retracing, amidst many ups and downs of the ASI. The down trend that continued went on till March of this year when the RSI fell to 37 points, and the ASI was hammered down to 5800 points. Did you notice that the RSI in June 2012 was 39 points when the ASI was in the region of 5000 to 4700 points. Then the RSI fell once again to 37 points but the ASI came down to 5800 points in March 2016. Now with the ASI at 6670 points the monthly RSI is around 50 points. Which is the middle point. Usually this can head towards 70 points within an uptrend. That is left to be seen.
Another interesting fact is that the ASI went up from June 2012 to Jan 2015 roughly on a monthly average of over 97 points, and fell to 5800 points on an average of 120 points. But from March low of 5800 to the present level of 6670 points, the ASI has gone up 800 points, averaging 400 points per Month. Therefore it is too fast than the previous uptrend. If we continue at this pace then we will hit 9400 points by December 2016. I do not believe that this is going to be the case. Then if we see an average pace of 300 points per month till December 2016, it will be 300 x 7 = 2100 points, then it will be 6670 points + 2100 = 8770 points. I do not believe this too. Then if we see the index moving up by 200 per month, then it will be 200 x 7 = 1400 points. That means the ASI must end at 8070 points. I tend to believe that this would be a level to watch. If we see the Index moving at the pace we saw last in 2012 to 2015 then it will be 95 x 7 = 665 points, that means the ASI can be around 7335 points. After seeing the index moving up by 800 points in 2 months I'm not going to buy the idea of seeing the ASI going flat from now onwards as many would like to think.
Presently I cant see the index falling below 6500 points. As such the upside is evident. I that is the case then the entire momentum shown in the RSI and the Index will reverse.
ONLY THING THAT CAN HAPPEN FOR THE PESSIMISTIC OBSERVERS IS TO SEE THE INDEX GOING SIDEWAYS AND THE TRADERS AND INVESTORS WHO ARE THERE AT PRESENT WILL BE JUST AS PESSIMISTIC LIKE THEY ARE.
As for me by looking at these charts I believe the ASI will test over 7000 points by September and the closing of the index will determine the level at which the ASI is going to be during this period.
For a strong and robust Stock Market the performance of the underline Company is highly critical. Therefore the results of the June and September quarters will be very very important. Hence buy to trade or invest according to a plan. Not because someone is telling you to do so.
No comments:
Post a Comment