Market has surprisingly managed to get back to OLD HIGHs and hitting right against resistance zone. This is the fifth time from beginning of this year, market is trying to break through this area. ONLY time will tell if it will be successful this time!!!
Market is back above MA(100) and MA(200), however MA(100) is still below MA(200) hence we need to be very cautious. McClellan index appears to have shifted gears and has managed to move above EMA(59) and MA(100) suggesting more stocks are advancing than declining. However we cannot yet dismiss the power of the pattern but will have to wait n watch.
On daily Nifty chart, it is very clear that market is headed right into resistance zone. This is the 5th time (from beginning of this year), it is trying to penetrate through. BUT will it be any different this time?
Also on weekly chart, it is very clear that market is heading into resistance area. In time, we shall get the resolution.
Isn't it becoming very confusing and frustrating...
Indeed it is becoming extremely difficult to pinpoint the trend at this juncture but that should NOT be a surprise. Before start of any major trend, many false signals (also known as whipsaws) are generated which in turn causes many people to loose out significantly, at the same time fear levels are elevated. Considering market is back at resistance area, it will be wise to wait n watch which scenario plays out:
What does it mean for our Investments?
Market marching into resistance area but be cautious...
Indeed it is becoming extremely difficult to pinpoint the trend at this juncture but that should NOT be a surprise. Before start of any major trend, many false signals (also known as whipsaws) are generated which in turn causes many people to loose out significantly, at the same time fear levels are elevated. Considering market is back at resistance area, it will be wise to wait n watch which scenario plays out:
- Market breaks through this area with conviction. Once it breaks through this area then resistance zone will become support level providing more confidence in the move. Also since market is trying to break through this level for fifth time this year, the resistance might become less effective over time.
- Market gets rejected yet again which will only suggest that the resistance is stronger and NOT yet ready to be broken. This scenario will drive market down back in the range.
What does it mean for our Investments?
- Mutual Funds - If still invested in equity markets then stay put but be cautious and ready to pull the plug. If in cash or liquid funds then it might be wise to stay away from markets until the situation is resolved.
- Stocks - ONLY invest in convincing patterns with STOP LIMIT in place. We added few BUY candidates to our watch list you might be interested in.
Market marching into resistance area but be cautious...