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...