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I did some analysis comparing sri lanka's premier blue chip JKH and compared it with a ASI.
And the picture is not good.
The green trend is the moving average, the blue trend is the ASI, and the orange is JKH.
We defenitely have hit the head and shoulder, that should result it free falling down.
The arrow mark is what we think is fair value of the ASI which is 5700.
The probability of ASI bouncing back is under the hands of the investors and traders. If they think this is fair value, it should gain momentum.
The market is moved by greed and panic, not by P/E's right now.
But the Eqidistance Channel also says the possible trend should between 5300 - 4600. If the market thinks this the fair value, then the market will futher come down. At about PE 10x. or less
This could cause a massive loss and wiping out most of the retail investors portofoilio, such as penny stocks and IPO investments.
But fundamentally it should bounce back, but we cannot garuntee whether it will bounce or crash below these levels. If it does, its nothing but a blood bath, we are facing total wipe out of capitalization in the market. This is the point of no return.
This should be the fact, i hope everyone gets a clear understanding, the regulators and the government cannot do anything about it.
Its the market, and the market consists of players. If we dont participate, too bad we are going dig our own graves.
This will be a clear indication that our economy got fucked and investor confidence is down the drain.
When you take JKH from this chart, JKH has the same potential of crashing down like the ASI index because the move at the same trend and more vulnerable due to the economy including the world economy.
about JKH, this chart speaks it all. JKH will reach fair value soon
