As expected we got the bounce, however market appears to be trapped between MA(50) and MA(200). Will it break through MA(50) resistance or fall back to MA(200) remains to be seen. What does it mean for near term market direction!!!
Not much has changed in below chart:
- Nifty has dropped below MA(100) which is NOT a good sign, yet has managed to stay above MA(200) so far suggesting to be cautious
- McClellan Index has flattened out which also suggest to be cautious
Nifty is trapped between MA(50) and MA(200) as can be seen from below chart. MA(50) has a potential to act as resistance, which means market will be heading towards MA(200) next week. However, if market breaks out above MA(50) then it might end up being trapped in the resistance zone again.
Market back in the resistance zone as seen in below weekly chart.
In past 3-4 months, market essentially has managed to do nothing and ONLY zig-zag in a very small range. As expected, this shall continue for next two months until election results are out, however market can also take a tumble based on global macro events (such as escalation of civil war in Ukraine, Venezuela and other areas across the world).
What does it mean for our Investment?
Market in staging zone suggesting to be cautious...
What does it mean for our Investment?
- Mutual Funds - It might be wise to remain in liquid funds, FDs, cash for now until we get a clear market direction. If invested in equities then be ready to pull the plug as soon as market starts dropping below current levels. If invested in debt/bonds then keep a watch on them and DO NOT take a loss more than 8-10% if things go south.
- Stocks - ONLY invest in strong pattern and DO NOT forget to have STOP LIMIT in place. You might like our watch list candidates which can be viewed here.
Market in staging zone suggesting to be cautious...