Ride the Rally for all its worth..... but which way?

We are in a Bear Market - that is for sure and no one should have any doubt about.... rally or no rally. The moot question is - as put across by Morgan Stanley is "How long will this bear market last?" Eighteen months is one estimate and it is absolutely probable. The report goes on to say that for the market to bottom out, retail investors have to panic, and there has to be a wave of earnings downgrades. This is about the worst performance in more than a decade on a year-on-year basis. However, domestic households still seem convinced that equities have to be bought and not sold. Another interesting fact listed by the report was - “Eventually, long bond yields need to stop rising, or put to put it another way, the market has to get confidence that the medium-term inflation rate is under control. On our residual income model, if the 10-year bond yields rise to 9.5% the Sensex fair value drops to 11380 (13% lower from here) signifying the importance of this indicator of macro fundamentals,”

I was talking to my uncle who has just started investing in equities - he wanted me to tell him when to buy again - crazy - he is sitting on tons of losses - as much as 50% erosion and he wants to buy again. This goes to show that the retail still have faith and will start investing in any rally we have taking it as a bottom. That might get another round of selling - the crude still has upside to it even though in short term there may be a dip down.

Okay to candles now - What I would wish is that 5 EMA crosses over 200 EMA - but the distance is so so high up that it seems impossible as of now. On a shorter target -- 20 EMA being crossed over by 5 EMA - That too is some time away.

As of now the MACD red Line has turned upwards and with a good session or sessions will crossover the blue line making it bullish. RSI and SlowStochastic is looking good. The only problem I see is that the TRIX is still facing down. StochRSI has given its divergence from the general trend and that too may be good. TRIN is what I am missing for an otherwise perfect green opening.

The politics will continue to rule the roost and whichever way the market goes on Monday - I expect the volatility to be very high. If you do feel like ideally you should have very very strict stoplosses lest the market does the unexpected.

I will end with some personal mesages - I will be extremely busy next week and may be off and on the blog. I have tried to put up a RSS feed on the site for whatever it is worth.

Best of luck for the week (hey this does not mean I will be unavailable)