As mentioned in last weeks blog post, we got our anticipated bounce but does it mean market has bottomed!!! Charts are our friend and as always provide meaningful insights so let's hear what they have to say....
Below Nifty weekly chart is providing two clues:
- RSI is in overbought territory, but will it remain overbought or turnaround like last 2 times? - probability of it remaining overbought for a while is very high as we are coming out of correction and the real reason might be provided by the last chart on this page.
- MACD which is a momentum indicator appears to be crossing over signal line suggesting change in momentum
Daily Nifty Chart is also providing valuable clues:
- RSI is in overbought territory here as well
- MACD is well above zero mark which is suggesting good momentum
- Market has managed to cross above 200 moving average and might be able to tag upper trend line at around 17700
Nifty advance decline line has improved significantly in past month which is suggesting that more stocks are advancing then declining and hence market is able to rally.
Below chart tells us why we need to pay attention to market participants and why rally in May did not have any traction.
Summary:
As expected Market is experiencing bounce for now, however will this bounce turn into bull market remains to be seen. As always we should manage our risk accordingly. For now, all indications are suggesting that we are having broad participation in the market and as long as it continues, the rally will be intact. This does not mean market will go up in straight line, expect pullbacks along the way which is also healthy sign.
Market bounce underway but be cautious...
As expected Market is experiencing bounce for now, however will this bounce turn into bull market remains to be seen. As always we should manage our risk accordingly. For now, all indications are suggesting that we are having broad participation in the market and as long as it continues, the rally will be intact. This does not mean market will go up in straight line, expect pullbacks along the way which is also healthy sign.
Market bounce underway but be cautious...