Markets cannot continuously keep rising, so at times it needs to take rest in form of pullback which appears to be the current state. BUT will this pullback turn into correction remains to be seen. What to expect in near term & be prepared?
What is below chart suggesting?
- Nifty although in pullback still above MA(100) while MA(100) above MA(200) - Appears to be normal pullback for now
- McClellan Index is flat yet above EMA(59) - suggesting to be cautious as more stocks are declining than advancing
Market sitting right at MA(50) support, will it get the bounce here? What will happen if the support breaks!!! Next support is near 7500-7600 area followed by MA(200) near 7200 area.
On weekly chart, market is barely hanging onto WMA(10), Will it hold?
It will not be a surprise if market breaks through MA(50) on daily chart and WMA(10) on weekly chart, BUT WHY? Take a look at weekly chart above, market has been rising relentlessly for past three months and managed to gain whooping 25% which is NOT normal. At some point, meaningful pullback is imminent hence it is wise to be prepared rather than get surprised. Any correction will present an awesome opportunity to enter the market at low risk. However if market holds MA(50) support and moves above 8200 then the rally still have legs which might be another opportunity to open new position or add to existing position with a STOP at 7800 area.
What does it mean for our Investments?
Market continues to remain bullish but better to be cautious...
What does it mean for our Investments?
- Mutual Funds - If invested in equities then remain invested, no need to stop SIP as well. If in cash or FDs or liquid funds then be patient for next low risk entry.
- Stocks - Invest in strong patterns, take advantage of our watch list to identify patterns along with risk management.
Market continues to remain bullish but better to be cautious...