BSE.. Contrarian Thoughts..

Let’s take a look at the expected recent correction in BSE – Indian Stock Market Index. The correction was continuous and (as I published a few months) that I expect a decent correction to long term support levels in 15K range.. And similar happened.

So what’s next ? The news in the Indian media has turned negative.. and the sentiment is a bit bearish.

And looking the charts and as contrarian, I expect a decent bounce to 17+K range. esp. when media has turned a little bearish.

Note that media and sentiment is bearish and NOT YET bearishful. TIll that happens, long term buying opportunities don’t arrive.

But short term bounce based on short term correction is quite likely. Play with caution, as this bounce could last a few weeks upto BSE touching 16.8K~17K levels, so might offer a good short term trade.

Also on the same token, regarding US Markets. the sellf-off over last few days seems to be making the Indices reach long term support line levels.. With Dow retesting 11600 and NASDAQ testing 2200 level.. there could be a decent bounce from these levels.. The liquidity crisis is causing markets to reach oversold levelsvery fast.. any relief from liquidity could cause a decent bounce.

At this point, I must admit that my last prediction of Dow bouncing to 13100, etc. didn’t come as true.. But I must also re-state that a 12% bounce from pre-specified levels did happen and it did reach sentiment saturation levels that I was expecting at Dow touching at 13100 mark. So my “criteria” of that bounce limits worked quite as expected (:)), although the overbought situation reversed a little earlier.

Enjoy the Game.