Today was the turn of China to send the shivers down world financial markets. The Shanghai composite crashed over 8.8 % after hitting record highs just a day earlier.
This in turn sent all the markets tumbling suit. More sign of the irrationality which we have been mentioning. The catch is that the markets have been bouncing back after all these shocks. The traders and investors in these markets has got so used to a one way bull market, that it will take a prolonged bear market, and a big dent in their pocket to finally convince them of the irrationality of the valuations.
Tomorrow is the Indian Budget day, another day when Mr Market is at his worst psychological mental state. This combined with the China news, and now Wall Street, should really make for some interesting market moves.
We stick to our bearish prognosis for the long term, and mind the short term nitty gritty in our trades. Trade the tide should be our motto. While being prepared for a long term correction soon.
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