Dow Jones keeps everyone guessing...

Dow Jones Industrial Average is giving a tough time for the chartists trying to predict the future of it's course. It is so close, negating a "Head and Shoulder" pattern - one of the strongest patterns. Dow Jones has had ~500 points rally so far in this month, which is historically the most bearish month. "Extremely" low trading volumes in the last few weeks could be attributed to this strange behaviour. On the other hand few analysts are suggesting, investors are waiting for the November elections to get over and only then we might get a decisive move in the US stock markets.

With just a few weeks ahead of the 4th quarter results, most companies would be trying their best to finish a strange year on a good note. Now to the charts.....

I know you guys will start wondering whether I can see only "Head & Shoulder" patterns :-). The pattern in the above chart gives a target of ~10,900 for Dow Jones.

Now to the "even" more interesting chart:

Just in case the previous pattern is successful then we would have "yet another" inverted head and shoulder pattern on the Dow Jones. And the target could be ~11,600 a new high since the recession started.

If all these patterns are to fructify, if there are no corrections in US will India have a correction - my answer would be "No". Indian stock market can be compared to a "beta stock" in the world market that outperforms the world in case of good news/bad news. But one thing for sure in case of Indian stock market is that the volatility is increasing and we might get a flash flood like correction and within no time get back to newer highs. A 10% correction within a week and then back to a newer high within the next few weeks - is quite a possibility.

If you are already invested in stocks - start booking part profits at new highs and re-enter on dips. You'll need a lot of patience - if you don't you'll regret :|.

If you are not in the market - the golden rule of investment is to enter on dips "not" when a stock is making a new high. Again restrain patience - if you don't like heart aches :-).

I am an "extremely" [yes I need an adverb, not redundant :-P] impatient guy - how am I in the stock market :-?. Well "Index futures" give an option to stay in the market "always" - long[buy and then sell] or short[sell and then buy], which further implies your investments work even when the markets are falling.

-Sri