Yet another market can be described as going too far too soon. As was described in my prior post http://you-buy-the-high-i-sell-the-low.blogspot.com/2008/12/indias-nifty-fifty-recovery-favoured.html, I was bullish, however when I look at the p/e ratio on a weekly basis which has previously acted as a reasonable indicator of overbought/oversold condtions, it seems that we are getting close to levels where you would want to be medium term short of this market. So here again is a market that makes me think that recovery hopes have gone too far too soon. I would be a seller here for a minimum return to the to the 3600 level.
As can be seen on the p/e chart above, the P/E ratio broke over 20 last week and readings over 23.5 have typically been associated with markets set for a correction lower. Somehow seems a little too quick to be up at these levels already?
Nice analysis. I was identified a stock for buying but am going to defer the decision now.
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