- Divergence between Nifty and RSI, PPO - As Nifty makes a new low, both RSI and PPO start trending higher
- Marginal NEW low in Nifty before trend change - Take a look at 1st low formed by Nifty and then after couple of months another marginal low lower than previous one before actual trend change
- Consistency - 2008-2009 & 2011-2012 were periods when market formed major reversal in trend
- Current rally might just be a bear rally and NOT trend reversal, however many will believe that the bottom is in and jump in this rally in anticipation of missing out.
- A high probability of market making marginal low before the next BULL run and can remain range bound for a while.
- It could be another 5-6 months before we get actual trend reversal.
What does it mean for our Investments for now?
- Mutual Funds - If still invested in equities then time to hold onto this roller coaster ride, exiting now will be very expensive and painful. No need to rush to start SIP unless we get positive trend reversal sign. If in cash/ FDs/ liquid funds then it is wise to stay on sidelines.
- Stocks - ONLY invest in strong patterns with good earnings guidance and DO NOT forget to have STOP LIMIT on open positions. When market is in correction, it will drag everything down with it. Check out our trade size calculator to manage your risk along with potential buy candidates watch list.
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Market is bearish and do not get sucked into bear rally...