Struggling to stay in resistance zone...

After surging to NEW HIGH, market gave up gains in past week. As expected, market continues to struggle in resistance zone. BUT can it continue to hold in this narrow range!!! Eventually it will either break out or break down, What will it be!!!

Not much has changed in below McClellan Index chart:

• Nifty continue to remain well above MA(100) and MA(200) while MA(100) stays above MA(200) for now.
• McClellan Index stays strong and well above EMA(59) and MA(100) suggesting underlying strength

Both are good for the market for now.

Daily Nifty chart below clearly shows, market is struggling to remain in resistance zone after reaching NEW HIGH. No clear breakout out of resistance zone, instead market may fall back into wider range.

Weekly chart is telling a different story. Watch all the dotted circles in below chart and pay attention to long RED bar, what can you infer from them? Every time, we got a giant RED bar, market slipped further for another 2-3 weeks. Will it be repeated this time too?

So far we know this:

• Market continues to struggle and to remain at NEW HIGH
• As mentioned earlier, this market is NOT going anywhere until 2014 election results are out as smart money will make sure that market remains in a wide range. 
• Even if it breaks out briefly, it will come back and retest current resistance area

Hence we do NOT expect market to provide significant gains in near term.

What does it mean for our investments?

• Mutual Funds - If still invested in equities then stay put but be ready to pull the plug anytime. If in debt/bond funds then make sure you do not take a loss more than 8-10%. It might be best to stay in FDs/Liquid Funds/etc.
  
• Stocks - ONLY invest in strong patterns and never forget to have STOP LIMIT in place.
  

Market at new NEW HIGH but be cautious...