HBJ Capital thinks that recent uptrend in the Global/Indian stock market which lead to 10-20% rise in last 15-20 days, is coming close to end or may be one can see again downward movement or free fall in the stock market.
When this will happen?
When? For this watch out DOW Johns Index, as of now it is at 11,450 level (while writing, it was down 150 points), Once the Dow closes below the 11,000 critical support level, I expect to see it plunge to at least 9,200. So, if your are really concern about when market will start falling, just watch out DOW Index.
Why?
#1. Crude correction is limited - Correction in the Crude from $147 a barrel to $124 might end somewhere near $105-110. After that it will again rise and target $150-$200, during this run-up, global stock market will slump again.
#2. Other commodity will also bounce back - Like oil, many commodities were overdue for a sharp price pullback. They've soared for months on end without a decent retracement and shakeout. So, any pullback is unequivocally normal. That applies to gold ... silver ... copper ... platinum ... and base metals like zinc, nickel, and aluminum. Plus, coal ... agricultural commodities ... and more.
But I repeat: It's nothing but a normal correction in a very strong long-term bull market. A process whereby "higher lows" are made, in a stair-stepping climb to much higher prices in the months and years ahead.
#3. Inflationary? - You bet it is. It will come back and one can see inflation level of 17-18% by Sept'08 in India. Just think what will happen then, Sensex @ 12,000 or 10,000; keep predicting.
#4. Dollar will further weaken - You know dollar is inversly proportional to Crude, hence when crude will bounce back, dollar will become weak and India's trade deficit will increase due to high cost of crude import.
-HBJ Capital Report.
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