Nifty took a U-turn in mid-April and a huge rally has brought it back to making New HIGHs. Soon you will start hearing lot of chatter on news and everyone claiming that this is start of NEW BULL market and what not! Avoid hearing noise and DO NOT get sucked into temptations, but WHY? Nifty is actually headed into a resistance, really!!!
If you have been following our past blog post in recent weeks then you should not be surprised by this rally at all. Look at McClellan index in bottom portion of below chart. Its downward fall has somewhat stabilized which means more and more stocks are advancing and less stocks are declining. In top portion of the same chart, we can see Nifty has crossed MA(100).
In ideal scenario this would be perfect BUY signal but what constitutes ideal scenario?
Only if Nifty was crossing MA(100) upwards while McClellan Index crosses EMA(59) upwards eventually crossing MA(100) as well.
In ideal scenario this would be perfect BUY signal but what constitutes ideal scenario?
Only if Nifty was crossing MA(100) upwards while McClellan Index crosses EMA(59) upwards eventually crossing MA(100) as well.
On daily Nifty chart, it appears as if Nifty may soon make a new HIGH for this year.
But weekly Nifty chart tells a different story. Even if Nifty makes a new HIGH for this year, it will enter resistance zone shown in red shaded area below. Take a look at November 2011, see how it reversed? Most likely we shall see lot of range bound action in coming months.
So what can be reasonable expected outcome:
In beginning of this year, we wrote an article on "Where is Market headed in 2013" and one needs to look at longer term market. At the time, based on available information and charts, it seemed like market may put in a top by mid to end of this year. It looks like market is on track for it to happen as 2014 is election year with lot of uncertainty.
What does it mean for our Investments?
Market continues to be bullish for now...
In beginning of this year, we wrote an article on "Where is Market headed in 2013" and one needs to look at longer term market. At the time, based on available information and charts, it seemed like market may put in a top by mid to end of this year. It looks like market is on track for it to happen as 2014 is election year with lot of uncertainty.
What does it mean for our Investments?
- Mutual Funds - Stay invested until we see signs of market trend change, initiating new positions is risky at this junction.
- Stocks - Invest in right patterns but do not forget STOP LIMIT.
Market continues to be bullish for now...