As expected and mentioned in our earlier post, market has managed to flush out the speculators and weak hands, some might have panicked as well. But the charts are providing vital clues of what might follow next... we just need to look at right places...
Below chart is providing historical view from 2010 till date and providing key information:
Current scenario -
What should we do?
- A major low in McClellan Index is followed by a massive BULL run
- Once the BULL run starts and after initial thrust, market often flushes weak hands and sets a panic before the next MAJOR leg up which we don't wanna miss
- McClellan Index provides a key piece of information here as it stays very close to EMA(59) which can result in the best possible entry into next major rally
Current scenario -
- We have a major low in McClellan Index earlier this year
- McClellan Index has pulled back to EMA(59) as expected
- Market has breached MA(100) and MA(200) causing panic and flushing weak hands
What should we do?
- Wait for safe bet - Wait for market to get above MA(100) to enter and McClellan Index to get above EMA(59) if you want to play is safe but then you lose some gains, not to worry, as much more gains are ahead of us.
- Take a risky bet - Enter the position now, however its risky best as market can simply decide to drop further in which case your stop loss would be triggered incurring some losses
Daily Nifty chart suggests that market is near support level, RSI is in oversold territory and a bounce an be expected here. We would like to see some consolidation here.
Weekly chart is also providing a clue, watch RSI which is almost oversold. Observe what happened in 2012 when this happened.
Charts are telling us that this might be the best opportunity to enter the market, we can decide if want to play it safe or take a risky bet. But missing train can be very costly in long run as we expect this BULL run to be very similar to one we saw during 2004 to 2007 during which the index tripled from 2000 to 6000. But remember markets don't go up in straight line so patience is needed.
Get ready and have patience...
Get ready and have patience...