Nothing changed from last week, Market stayed where it was trying to stabilize in the midst of Global economic activities. How long will market remain in correction mode? Is this mere correction, Will market will turn around to continue BULL trend OR Will this correction start next BEAR market?
Nifty is below its MA(100) & MA(200) which suggests that be cautious and stay out of the market. However, it may look like market is stabilizing but unless it moves back above MA(100), we do not enter market unless underlying stock action is bullish with a very convincing pattern. Also in bottom portion of below chart, McClellan Summation index line is converging towards EMA(59) signaling to be alert.
Especially when both of the below things happen, we stay our of market:
Especially when both of the below things happen, we stay our of market:
- Market crosses MA(100) from above and is below MA(100)
- McClellan Summation Index crosses EMA(59) from above
Below weekly Nifty chart shows where is the market in the bigger picture. Most likely market will stabilize in 4600-4800 area and bounce back. The question is will that bounce stick around and will market continue higher above recent high of 5600 level. Considering current Euro crisis, unless a drastic measure is taken Greece default is imminent. Euro-zone might push the worries down the road but at some point in future it will happen. In addition, we have national issues which are adding concerns as our debt levels are high and economic growth is not as expected, hence FIIs are not investing.
Foresight: Short term, we might see market stabilize and a push higher. Long term picture is not as good as one would like, if Greece defaults then we will see history in the making and repeat of 2008 US financial crisis but this time at a much bigger scale at Global level invoking deep recession across the globe, however it will be a slow process and will take months. ONLY time will tell...
Although market is in correction BUT this is the ideal time to do your homework, create our stock watch list, identify potential BUY candidates. When market turns around, these stocks will be the one to lead the rally and make significant move in short period of time.
For now, stay alert and be cautious....