RSR AUGUST – BEFORE THE BULL

This has not happened the first time, but happens cyclically. We fall in love with a stock or index and then the love sometimes reduces and sometimes turns to hate. Classical stories are RRC. The top traded stock of one time witnesses lack of trading interest now. Similarly the top index BETFI is witnessing not only less tradability but also poor performance. BRD outperformed BETFI by 40% since 04 MAY and ERSTE outperformed BETFI by 179%. Now for someone in love with BETFI, this is a heartbreak. Your winning horse failed the race coming last and a horse you did not bet on zoomed like a rocket. Was the betting chance or inability to understand performance cycles. When something performs we keep expecting it to outperform and when something underperforms we keep looking for weakness in it. Till the time we can’t separate performers from underperformers, there will be a consistent upsets where we will look at blaming everyone else but our own self. At Orpheus, we are trying to overcome this bias and have started basing our research work first on performance cycles and then on any other forecasting theory. We want to put our money where our mouth is. This is why we will keep a balanced focus on BETC, BET along with BETFI.
About the markets ahead for AUG. RSR has shown some interesting observations yet again. Most of the readings are back in the bullish zone nearing average 70 for both the sentiment groups and time frames under study. What does this mean. This means sentiment has shifted into positive mode after two months of negative readings. However, the drifting that we explained (THE SENTIMENT DRIFT) has never given a reversal in a month. That means after we see sentiment readings turn positive after negativity, it remains positive for atleast two months. This is a generalization but considering markets and humans drift, it is tough not to give market some more space for some further upside before the real crack appears. Whether it is mid August or early September, it is tough to say now, but high sentiment readings should be followed by intermediate negativity not positivity.
Moreover we should not forget that BETFI is still under 20,000 (May highs). It was here in RSR we said “SELL IN MAY and GO AWAY”. Nothing much has changed on our “favorite” BETFI, it is just back to where it was in MAY and even EURO LEI is still where it was (THE FOREX SENTIMENT), in a large trading range. It was in this period that valued members and readers following Orpheus Research were updated with the following stories “BRD outperforming BETFI”, “BETC above 2,200 negative view is challenged’, “Erste hangs over the neckline” and recently the story on “Erste and Tibetian Monk”. The stories clearly suggested that the performance in the market was polarized. A section of the market was winning consistently while the other was stagnating.
In conclusion, despite all signs of some intermediate topping ahead in a week or two, there will be performers. The overall primary more than a year long cycle has also started to see confidence coming back. Any dips now into Q3 should be the last dip for 12-15 months. So get ready to shake out the last round of negativity before the coming BULL MARKET.
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