Nifty continues to remain in pullback mode but for how long!!! Not much has changed from last week, however we need to be cautious and alert.
What do we see in below chart?
- Nifty very close to crossing MA(100) line, we consider it as our SELL signal, although NOT yet there
- McClellan Index has already crossed EMA(59) and MA(100) suggesting caution
As we can see from Nifty daily chart, Nifty is currently sitting near support around 5800 area, the next support is near 5700 area. Most likely we might see consolidation around 5800 area and then a bounce attempt, however MA(50) line could act as resistance.
Weekly Nifty chart shows, Nifty is resting on MA(21) line, expect consolidation and a bounce attempt. Why? Look at November 2010 where we can see similar action below.
What holds for us in next 3-6 months!!!
We expect Nifty to bounce from current level and after slow rise challenge 2011 highs. Once that happens then Nifty may experience a topping pattern with lot of volatility along with zig-zag action eventually undergo a bigger correction, NOT necessarily trend change. Only time will unfold the real story...
What does it mean for our Investments?
Market in pullback mode yet bullish BUT be cautious and alert...
We expect Nifty to bounce from current level and after slow rise challenge 2011 highs. Once that happens then Nifty may experience a topping pattern with lot of volatility along with zig-zag action eventually undergo a bigger correction, NOT necessarily trend change. Only time will unfold the real story...
What does it mean for our Investments?
- Mutual Funds - Stay invested but be cautious. Even if we get SELL signal no need to rush, market will make a bounce attempt and provide us with an opportunity to re-evaluate situation at that time, have patience.
- Stocks - Invest in right patterns and DO NOT forget to have STOP LIMIT in place. Since market is in pullback mode, this might be best opportunity to create a watch list of potential candidates.
Market in pullback mode yet bullish BUT be cautious and alert...