Last week market got another boost, this time it was Indian Government policies regarding FDI's. Market is cruising higher and managed to gain 11% in just two weeks, volume is also supporting this action. However, we are also witnessing lot of political turmoil and ONLY time shall tell us how it will all resolve. For now market may keep pushing higher, we have some resistance near 5740 area and next big resistance near 5900 area. How will this play out!!!
Below chart clearly shows, Nifty is well above MA(100) while McClellan Index also remains above EMA(59). Both suggesting market remains in bullish mode.
Nifty has broken the resistance near 5600 area on high volume and next resistance is near 5740 area followed by 5900 area. The shaded area is known as "Bollinger Bands". Every time Nifty tries to get outside of this bands, it is usually pulled back inside which is very visible in below chart. That does not mean market will go into correction or pullback mode immediately. It may make another move higher and possibly pullback or go sideways, just the way it did few days back.
You can very easily see what happens when Nifty is out of these bands on below weekly chart. See what happened in October 2011, expect similar action here as well. Possibly hitting 5900 area before a meaningful pullback/correction. But also lets NOT forget political turmoil which might force market to take another route.
What does it mean for our investments?
Enjoy the party....
- Mutual Funds - Keep invested until we see any sign of trend change or concern
- Stocks - Take partial profits and invest in right patterns along with STOP LOSS in place.
Enjoy the party....