Although market has remained range bound for past couple weeks, we might get to see some action in near term. But based on what? Lets take a look at charts which might provide some clues...
Not much has changed in below chart, all signs remain bearish for now.
Daily Nifty chart has developed another H-S pattern, this time on a smaller time frame. Market might be able to break through the resistance and stage a nice rally to close the gap. Incidentally, at that point MA(200) will act as resistance and market may fall back into the range to continue its next leg down which is shown in below chart. However, if market can hold and break through the MA(200) then that might change the bearish trend. Also watch the divergences in RSI and PPO (shown by arrow) as market was making new low, possibly hinting towards the rally mentioned above. Unfortunately, this cannot be used as rule of thumb and only realized after the fact, hence we call it speculation.
Clear consolidation pattern emerging on weekly Nifty chart below, also trend line might be acting as support.
As current range bound action is evolving, we speculate that we might get a nice bounce rally closing the gap. However, sustaining the rally won't be easy and we shall see lot of zig-zag action. Stay alert and cautious.
What does it mean for our Investments?
Market still in correction, if possible stay out...
What does it mean for our Investments?
- Mutual Funds - If still invested in equities too late to get out unless you want to get out now while the bounce lasts, also you might as well ride the correction and be prepared to take the hit. No reason to continue SIP at this point. If in cash/ FDs/ liquid funds then it is wise to stay on sidelines.
- Stocks - ONLY invest in strong patterns with good earnings guidance and DO NOT forget to have STOP LIMIT on open positions. When market is in correction, it will drag everything down with it. Check out our trade size calculator to manage your risk along with potential buy candidates watch list.
Market still in correction, if possible stay out...