- Probability of a possible bottom (or top) so we can get aggressive (or cautious) based on PPO & RSI
- Low risk market entry based on reasonable rationale and not emotions using resistance & support levels
- Keep it simple
Now lets look at below chart:
- Market appears to be recovering but is below 100 day moving average (in red) hence be cautious
- 100 day moving average is above 200 day moving average hence the BULL is still alive
- McClellan summation index appears to be bottoming which means more stocks are advancing than declining which should help the market move higher but could take some time
- Expect a possible rally above 11000 area
- Breaking 10000 support can cause lot of pain
- Watch out the complex Head-Shoulders pattern on weekly chart
Geo-political global view:
- US markets are undergoing wild swings due to government shutdown & trade wars, still not stable and can affect global markets
- Brexit & Euro zone issues can crop up
In short, we expect few more bumps before we can get a good sustained rally. Its better to be cautious than be sorry, no need to jump in the market unless we see a definitive sign of rally & if we are already in the market then lets be on the guard.
Good Luck! & wish you a happy, safe & prosperous New Year 2019.