Market appears to be loosing this rally as it is barely hanging in the resistance zone. But that should not be a surprise to readers of this blog. BUT where is this headed and are you aligned properly?
What is below chart telling us?
- Nifty dropped below MA(100) - NOT a good sign, however MA(100) is still above MA(200)
- McClellan Index is turning - Are these early signs of trend change! However, McClellan index is well above EMA(59) and MA(100) for now.
Daily chart is telling us better story. Nifty dropped below MA(50) which is considered a key support, also as of now Nifty is towards the lower end of the resistance zone, next support shall be MA(200) near 5970 area. If this level is broken then expect lot of volatility and possibly a hard drop towards 5500 area.
On weekly chart, it is very clear that resistance zone is very strong and market simply could not break it.
As expected, this market is finding hard to remain in resistance zone and could drop in coming weeks/months ahead. We do not believe that the market will significantly breakdown before election results are out and will remain in a WIDE range (above 5500 area). However, global events can drive things crazy hence we shall always be on the guard in times of uncertainty. Capital protection should be our utmost priority at all times.
What does it mean for our Investments?
Market finding hard to maintain course, be cautious...
What does it mean for our Investments?
- Mutual Funds - Get out of equity funds if market drops below 6000 level. If invested in debt/bond funds then stay put but DO NOT take a loss more than 8-10%, remember you can always get out with a small loss. Best course of action might be to stay invested in FDs/liquid funds or cash.
- Stocks - ONLY invest in strong patterns and DO NOT forget STOP LIMIT, check our watch list here.
Market finding hard to maintain course, be cautious...