- 2014 current chart
- 2003-2004 chart
Considering we are in a Mega BULL market the ONLY past period we can compare to is during 2003-2004.
What are we looking at in both charts?
- Nifty in relation to its MA(100) line
- McClellan index in relation to its EMA(59) and direction of McClellan index
2014 current chart -
- Nifty managed to bounce of MA(100) line, will it continue going forward!!! - As long as, Nifty remains above MA(100) benefit of doubt goes to BULLs
- McClellan Index is below EMA(59) and trending down suggesting to be cautious
- Nifty was moving in a range, broke MA(100) twice before the actual drop - plenty of warning signs
- McClellan Index crossed EMA(59) much before Nifty crossed MA(100) and was trending down much before the actual market drop
At present, our market might be giving us subtle clues of what is coming in next few weeks or months ahead. However, nothing is certain or guaranteed in the markets. Remember, it is a game of probability and as long as we remain on right side of the market, we have better odds of staying in the game.
Based on current chart, it appears that BULLs get the benefit of doubt this time around, however we need to be cautious as this week was short and low trading volume. Next week shall provide us with a better picture.
What does it mean for our Investments?
- Mutual Funds - Continue to remain invested in equities, same applies to SIP. If in cash/FDs/liquid funds then you may have a choice to make but DO NOT forget your STOP LIMIT.
- Stocks - ONLY invest in good patterns and DO NOT forget to have STOP limit in place. Some of our identified candidates in our watch-list have done quite well. Also take a look at trade size calculator which might help you to manage your risk per position.
Market BULLs gets benefit of doubt but remain cautious...