Nifty Prediction Pullback in mature stage be very cautious now

Nifty Prediction Pullback that started at 7511 is now in a mature stage get on cash as far as possible because second half of the year looks dangerous

We were the only ones to tell you to get to cash on portfolio front at 12000 levels and we were the only ones who told you to buy stocks aggressively at 7511 to 7800 (60% of our portfolio hit life highs after that) so first things first yes we have clearly outperformed each and every player in the market and we will continue to outperform everyone over time but let us come back to the point. Now, some of you may say that I got out at 10200 and got out a bit early while Nifty has moved higher my exits were perfect as far as my portfolio is concerned so for e.g. Nestle India bought at 12500-13000 levels and got out at 17500. Despite Nifty moving higher from 10200 to 10800 Nestle India has fallen well below our exit price and as of today is at 16700 or for that matter stock x which is a leading player in the retail segment is lower from our exit price the point is more or less everything that we exited around 10200 is lower from our exit levels so my strategy to exit around 10200 has played out very well.

Part of what we have mentioned when Nifty was at 7511-7800

[9:16 AM, 3/24/2020] Glen Drago: Nifty heading for 10600-10800 in next few weeks now

[9:18 AM, 3/24/2020] Glen Drago: Buy delivery in recommended stocks and hold
[9:18 AM, 3/24/2020] Glen Drago: expected move CMP-7350>>10200-10800

[11:03 AM, 3/27/2020] Glen Drago: Nifty don’t see sustaining below 8400 spot now expect some minor consolidation for next few days before starting next leg up towards 10200-10100
[11:03 AM, 3/27/2020] Glen Drago: Buy delivery in recommended stocks if you have not done so
[11:04 AM, 3/27/2020] Glen Drago: Reiterate we see 10600-10800

So this is what we had told our clients now the important point is I am not saying this now we had already predicted this move based on a combination of cycles, wave counts and valuation calculations but keep in mind that we had predicted this as a pullback and now that pullback that started at 7511 is in mature stage and more or less done once we get reversal confirmation we can see lower levels or rather significantly lower levels in the coming time so be very careful here.

So, why I am not bullish anymore on the markets from now onwards?

well there are many reasons for the same and I honestly can not explain everything here even if I wanted to but I am listing out a few of the reasons which you can check yourself

Nifty trailing PE above 28 now go back in history and check this simple yet effective indicator each and every single time in history whenever Nifty has had a trailing PE above 28 we have without any exception seen Nifty dip at least 25% from that level over the next 12 months so the reason could be anything however the net result has been the same as always and we have always seen a fall of over 25% in the Nifty

Retail euphoria most of you know that over the past 3 months there have been a record Demat and trading accounts that have been opened and all are just trading in the markets some people have become day traders while some have suddenly started options trading point is there is significant retail euphoria and this is another indicator that is a sure-shot red flag. This always happens prior to major tops being formed so in this case a lower top formation is likely. 

Mid-caps and small caps hitting upper circuits daily. I do not have a problem with these stocks going higher but the manner in which and trajectory in which the lower grade companies with bad balance sheets and pathetic management’s are moving higher is a dangerous sign once again this pattern is seen during the end of a rally or just about when a top is about to be formed.

Nifty showing divergences and reduced momentum while I will not elaborate on this but if you just look at the charts Nifty is struggling to move higher there are series of divergences indicating dangerous signs and this too has been associated whenever we are about to hit a top

Cycles the present situation is because Jupiter and Saturn the two most important planets for the market (there are other important ones also ) but be that as it may Jupiter and Saturn both are retrograde as a rule whenever planets are retrograde they impart energy similar to that of their previous house and in this case, we have a similar energy to that of end of 2019 and we can see similar price behavior in the markets however it is paramount to note that once they cross midpoints they once again will share the energy that was present in Feb and march months so what we see today is irrational exuberance will suddenly change to mass hysteria. 

Those who would like to have more updates can follow us on twitter @DragoGlen so you will keep getting some more insights on a regular basis 

As usual, if you are only trading on the basis of this post please use your own risk management and then only trade please do not over trade and always keep your risk in check. These are my personal views and what I have done in my own portfolio and also what I have recommended to my clients. We did make a good 43% since March and we are happy with that return but keep in mind I may be wrong also it is possible so please if you are following only on the basis of this post please use your systems and logics.