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Charts & Analysis

Nifty Snapshot: Markets at a 52 Week High

At the close of 5703, the Nifty’s at a 52 week closing high. A few notes will follow this chart:

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(Click for a larger image)

What this tells me:

  • We have broken out of a 1 year range, but to be honest the larger resistance is that 6300 figure in the distance.
  • We are back to high valuations (>18 P/E) which might reflect easy money and the hope that government has gotten its act together.
  • As you can see, this "down" cycle didn’t see the P/E go too low, nowhere near the 12 levels that one would consider a great time to buy. It could mean that we’re reaching a new paradigm (where the 12 P/E simply doesn’t happen) or that the low is ahead of us. I think it’s the latter.
  • The Daily Moving Averages or DMAs are way away. We’ve gone up very fast in a month, the 200 DMA and 50DMA are both way below the current index number. And we’ve had a golden cross (50 crossing upwards of the 200). Finally both DMAs are pointing upwards. These are signs of bullishness but remember that the DMA is a lagging indicator, not a current one.

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