ASI Weekly Report - What Goes Up, Comes Down....Then Goes up and Comes Down too!!!

But need to always remember that Stock Prices fall for reasons beyond your control...... I had this sentence in my Weekly report of the last week. I also wondered in that report whether we will break 5900, and 6000 during the week between the 29th of July to the 2nd of August. All be hold it happened in 1 single day i.e. 29th. The next day opened with the same vigour but failed to hold. This is what happens when the RSI is extremely high in the overbought area. You lose steam in no time, and find the cooling off effect. If you are a strong believer of the Bullish Trend Extensions, then you had a fantastic opportunity to buy on the dip. But if you do not believe, yet want some action in the market, then you need to have a plan with a stop loss included. Otherwise why are you in the Market?You either have to believe or dis-believe. Either way you need a plan. Otherwise please keep your money in the Bank or put that valuable part of your wealth to something else BUT the stock market.

Nonetheless the Market closed higher on WoW basis with an increase of 21.81 points (.37%). The Trades too hit a high of 56,698 from 43,154 of the last week. This indicates that the power of the bulls succeeded in withstanding the power of the Sellers, despite it being strong. The Market PE is edged up to 9.46 times.

Did you know that the PE is also an important value to check whether the Market is over heated or not? If RSI is the indicator for Technical analysts, the PE could be the indicator for the Fundamental Analysts, to check whether the Market is over heated or not. Generally when the PE is at 15 or 20 times you will hear many analysts highlighting the dangers of the market. But just keep a look at the Table given on the left to track the PE as and when the ASI moves to the levels given there. Of course the PE is based on the last financial year, hence it will change based on the Earnings of the present fiscal year. If you think that earnings of the overall market will increase/decrease, then the PE values will vary this way or that. You are free to track it or not, but I think it gives you a valuable message in this bullish trend culminating with the 2 Major Elections.

ASI weekly shows that if the reversal from the minor pull back is held and move up, it will re-test 6050. Depending on the strength in terms of price and volume we will see a break out to test 6200.

We also may see a re-test of 6050 then a re-test of the area between 5950 and 6000, and confirm it as a strong support area and break 6050,6100 and test 6200. If we see the same euphoria that we saw from the 2nd week of July, then all these will happen in no time. Else we will see consolidations between 5750 and 6000 and extend. That will drag the level of activity, which will slow down the pace of the Trend extension. If none of these were to happen, we will see the index breaking down form 5750 and put more pressure on the rally.

However the Bulls need not panic just yet, as the DAILY and WEEKLY charts indicate a Strong Buy.
Let's be bold to obey the present trend.

It is your valuable money that your are investing. Therefore if you believe that the trend will hold buy on dips. If you do not then please have stop loss rules in place. There is no point blaming others once you loose. Also be prepared to take profits based on your own methods. Please feel free to talk to your broker as he is trained to serve you better. On a side note check my RCA strategy which is to understand, and the RVA strategy if you think that's better. Both these strategies will help you to Trade/Invest with controls. You can read it here