Saturday, October 1, 2011

No Man's Land

On 26th September morning I wrote that SPX will have trouble going past 1150. But when on 27th September, it closed above 1190 readers questioned my calls and there were talks of 1200 or bust. Sure enough we closed the week and 3rd quarter at 1131. So I can say that I have been vindicated.  

My theme has been consistent in this respect. That we shall be seeing continued weakness in the stock markets well in October and we might re-visit the lows of August. But at the same time, the bottom is not going to fall off yet.  I also expect weakness to continue in precious metals, at least till October. Those who are short on gold and silver might want to get out and close their position in the next two weeks or so.
Things are kind of messy all around and it is not a market for investors. On one hand ECRI is taking of imminent recession and there is enough doom and gloom to sink a battle ship. On the other hand, all the Central Bankers and governments of the western world are trying their best to re-inflate the stock markets. I think in the short term, the CBs and TPTB will win and they would be able to paint the rosy picture. But not before we have tested the lows of August and a new round of liquidity is injected in the stock markets.

I have been travelling and have reached India. Every time I come here, I cannot but marvel at the perfect example of chaos theory in operation. The roads are crowded as ever. The airports are teeming with travelers, things are noisy and chaotic. How anything works is anybody’s guess. But they work and India is making good progress despite the odds.

I plan to write a comparative analysis between India China and Brazil in the coming days. I think for the coming decade India offers the best growth opportunity and Investors would be wise to realize the potential of growth of Indian stock markets.

For now, let me try to shake off the jet lag with some more sleep.