Every day till the Large cap indices Nifty and Sensex do not give in their gains, the discussion is on whether the Midcaps are at a bottom, or Large caps are at a top. I got one answer saying both. But both never occur, one of
the two is misplaced wisdom. This chart of the Nifty Small cap index that I circulated in the Long Short Report [LSR] last year is as true today as was then. The entire pattern from the 2009 lows up is an ending diagonal and meets the requirements fully. Also while the throw-over above the yellow line appears large E<C and so it is not wrong, that wave E itself transformed into an ending diagonal is also natural in long term tops. The blue ending pattern is also 3-3-3-3-3 even though the
waves do not overlap, and overlap is not a rule thought it is preferred. The failure to stay above the yellow lines and now breaking to the lower end of the wedge only verifies the complete reversal and failure of the broad market. An ending pattern this big is a long term top. Then if the lower wedge line also breaks now, it will be the large caps that will quickly catch up with the broad market, and portfolios that are still holding out on those grounds are not going to look pretty. In
fact it will look like a mess that you cannot get out of anyway. Ignorance has been bliss if you are exposed to the top 5 stocks only else this is brutal and not getting any better. The risk of a further protracted decline from here, with the big boys playing catch up backwards, is being completely ignored. I stay alert for the same as Macro factors discussed in the June LSR remain active. We are right now facing a rising dollar falling commodities prices and are on the verge of the next
interest rate spike upwards. Stay prepared.
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