Two weeks can make such a difference!!! Market has managed to bounce hard from extremely oversold levels. BUT can this bounce sustain OR Will history repeat itself!!! What HISTORY!!! What shall we expect in coming weeks/months?
History often repeats itself, although NOT in step foot steps. What can we learn from history in below chart?
- Is this bounce a surprise to us?
- Didn't we expected this!!!
- Are we witnessing similar pattern which happened during early 2011?
Nifty is resting right on MA(50) but as mentioned earlier, we have lot of resistance on upside.
On weekly Nifty chart we get a better picture, how so? Candle Bar tails at TOP and BOTTOM suggest probable change in direction for short term, a TOP tail is visible on the last bar suggesting further downside is probable. This would also mean that we are seeing "dead-cat bounce" which a common term used in market terminology and means just a bounce attempt before falling further.
Based on current information, it is very probable that we are witnessing final bounce before market continues its journey lower which can also be considered as starting BEAR market. However nothing is guaranteed hence we shall follow market clues and NOT get caught up in all the noise. Next few weeks are critical and shall confirm the change in trend...
What does it mean for our Investments?
Market remains vulnerable to further downside...
What does it mean for our Investments?
- Mutual Funds - If you are still invested in the markets then use this bounce to exit equity markets, if you are already in cash or liquid funds then stay put and wait for next opportunity. If you are invested in debt/bond funds then do keep them on your watch list as current times are NOT good for stocks and bonds.
- Stocks - ONLY invest in very convincing patterns and always have a STOP LIMIT in place. Take partial profits on open positions.
Market remains vulnerable to further downside...