Yesterday, the Dow Jones fell by nearly 1,000 points. When was the last time you saw such four digit falls? Very recently?

If we go by just the charts, we have an interesting one now. Have a quick glance at the weekly chart below, and you'll notice two things:

  1. The pink horizontal line is the Pivot, which is based on the Price Action. I've drawn a purple line just at the point where there was a strong support a few weeks back. We are bang at that line. And if you see the weeks / months earlier, you'll notice that support was a previous resistance. So this is a strong point for a market to decide on its direction.
  2. The other pink trend line is the 21 day moving average. While moving averages are not perfect, because they change based on the time frame you take (you'll see that in a bit). It does show that a break of that line could either mean a good entry point or if we see another week of falling further, then we're in for more downside. A fall below the black trend line is more serious, that's the 200 day moving average - that is something you really need to keep on eye on for the larger trend. And if you go by the daily chart, we have already broken it (see the chart at the bottom of this page) - but to confirm a real break down, I would look at the daily chart to see if the 21 moving average has crossed the 200 day moving average - and we're not there yet.
Weekly Chart - 21 Day Moving Average is broken
Daily Chart - 200 Day Moving Average is broken

So what's my conclusion? Well, as mentioned earlier we're at a crucial juncture. Just in time for the US elections. How will this affect Indian markets, well - the outcome of this election can affect all countries worldwide. Think of it as the Butterfly Effect.

Given that FIIs (Foreign Institutional Investors) are a big influence on the Indian markets, the direction will be dictated by their buying/selling - so just stay tuned for the week ahead.

I mentioned this before, while the markets having been moving up - the economy has not been shaping up too well. When will we go back to normal? I don't think we'll see that unless we see everyone NOT wearing masks in public. So long people are wearing masks, things are NOT going to be normal.

Side Note: If you haven't watched Scam 1992 - you MUST. Currently, as of 24 October, it is the highest rated Indian movie at 9+. It's available on SonyLiv - which you can also watch on your browser. It's the story of Harshad Mehta, and a fascinating one, produced by award winning Hansal Mehta (no relation I presume).

Scam 1992: The Harshad Mehta Story (TV Series 2020– ) - IMDb
Scam 1992: The Harshad Mehta Story is a TV series starring Shreya Dhanwanthary, Pratik Gandhi, and Anjali Barot. Set in 1980′s and 90′s Bombay, it follows the life of Harshad Mehta, a stockbroker who took the stock market to...

There is a similar instance in the movie going on today, markets going up, while the economy was going through a crisis. Some may attribute this to the fact, that there are no other better avenues to invest, and they may be right - but that may not be the only reason.