Market bullishness is clearly indicating a big win for BJP.
Can any analysis forecast outcome of events like Brexit, or trade war, or India’s elections?
Yes. Because all major events are reflected in stock markets, and if one can decode its price movement, one can predict outcome of major events.
Markets are never wrong, and they are brutal, only the smart investors succeed. Small and retail investors are always at the receiving end.
In fact one of the simplest indicators of markets is mutual funds inflows, when inflows decline for several months, that indicates a buying opportunity, and when there is a frenzy of inflows, that may be the time to exit. Just look at the recent rally, markets have been going up since November 2018, and the mutual funds inflows are declining from November 2018 after hitting a high in October – exactly reverse!
It simply validates the fact that retail investors are losers. They always enter when the markets have reached almost mid of its rally and exit when markets are near the bottom. And this is true for even developed markets like US – see the chart below –
So what does the current rally signify?
This rally picked up momentum after the Pakistan issue and it undoubtedly implies that markets expected higher chances of Modi’s win and cheered it. Irrespective of whatever one may think about his abilities and achievements, markets favor him – a fact in no uncertain terms.
There is only one objective way to ascertain the future – to build an algorithm that can predict the major market turning points. We developed one in 2013, and since then it has been 100% correct in all its forecasts. All forecasts were posted online for everyone to see.
What is the current signal from our algorithm?
Right now our system is indicating a major bottom after three years. Our system had indicated a buy signal near 7900.
There have been 4 major bottoms since 2012 and our system had identified all of them.
If you look at the upper panel of chart below, there is a thick red line indicator that when turns up, supported by another dark blue indicator, always coincides with a major market bottom. The recent signal, marked 4, is a clear indicator that we are at a major bottom and can expect a substantial upside from here – also implying win for BJP.
Till now this system has not failed.