Market is back to making NEW HIGHs getting a bounce at MA(50). Is this the right time to get in? OR Is it time for patience!!! Can this market continue the rally as we saw in month of May 2014?
Not much changed in below chart:
- Nifty well above MA(100) while MA(100) well above MA(200), all lines are trending higher
- McClellan Index well above EMA(59), however its rising slope appears to be waning slowly and could flatten out in coming weeks/months
Check out the black doted lines in below Nifty daily chart, this type of pattern is known as "Mega Phone" pattern. It is very likely that market will take a turn once it hits the upper trend line and follow the
RED dotted line. Remember, this is a game of "probability" and nothing is guaranteed. As long as market remains above MA(50), we can relax and stay in the game. See how market fought to bounce back from WMA(10) line on below weekly chart. As long as it can stay above that line, nothing to worry.
We were expecting market to go sideways or have a shakeout, however market is moving in Mega Phone pattern visible on daily chart. As of now, the probability of range bound action or pullback/correction appears to be high. At this juncture, it is wise to wait for next low risk entry, this does not mean STOP SIP if you are already invested in the market. Opening new positions is not wise at this point in time.
What does it mean for our Investments?
Market remains bullish however remain alert...
What does it mean for our Investments?
- Mutual Funds - Stay invested in equities as long as Market remains above MA(50) on daily chart OR above WMA(10) on weekly chart. If in debt funds then stay invested BUT do not take a loss more than 8-10%. If doing SIP in equity funds then continue as per the plan unless market drops significantly (we will get plenty of warning signs). If in cash/FDs/Liquid Funds then wait for next low risk entry and be patient.
- Stocks/ETFs - ONLY invest in strong patterns with good earnings guidance and DO NOT forget to have STOP LIMIT in place. Use our trade size calculator sheet or App to help you identify your risk appetite.
Market remains bullish however remain alert...