The US markets broke key levels today with no impact in Asia. But dont get complacent just yet. Give it a few days to prove itself. Lead lag between India and US is not new. The chart from 2008 below shows how the two markets deviated till the US broke key necklines. Only days after that did Indian markets give in to the pressure from there.
So can we get a similar scenario now? With small caps soaring for the last few days we should have our doubts about the market. The chart below shows the similarity in the current scenario so far. The Dow has started its break down from a rising wedge just yesterday. So the next two weeks is crucial. Both markets remain below their 19 Sept highs. And both exhibit multi-month potential distribution patterns. The US is first to confirm the breakdown as before. Will we follow is todays question. It took a few days the last time for reality to set in and it took a reversal in the broad market for that to happen. So that is the clue to be looking for and give it some time before jumping to any conclusions.