How can someone be short the markets when the central bank's definition of inflation excludes asset price inflation (as well as oil and food), but the definition of deflation includes asset price deflation? The Fed is concerned with a credit crunch impacting growth. A credit crunch will happen whenever asset prices decline. So the Fed is concerned with asset price declines. So they will always cut when asset prices fall. At the same time they won't do anything if asset prices rise, because it doesn't get included in calculation of core CPI. So one should always be long.
I was wrong. The bottom happened on August 16 - the day Fed cut the discount rate. I mentioned to Akshat that day that Indian markets are going to 18000, but never acted. Plus the tape kept telling and I kept ignoring. Lesson learnt - never bet against the Fed. Fed moves the markets.