Market appears to be stuck in a range, which should not be a surprise. Recent actions suggest a normal bounce from oversold conditions. What should we expect in coming weeks/months ahead!!!
Below chart is providing a very subtle clue, take a look at McClellan Summation Index which appears to be flat. A turn to upside would suggest that more stocks are advancing than declining in cumulative fashion. In other words, it would mean that market internals would change over time. Only time will tell...
Daily Nifty chart shows range bound action and lets not forget that any upside action needs to overcome resistance. We might be experiencing a bounce from oversold conditions. However, the longer market remains in a range, it starts establishing a base which can act as support.
Not much has changed in weekly Nifty chart as RSI continues to remain below 50 mark, PPO is below zero mark and MACD is trending down.
Overall, market continues to remain vulnerable and further downside is probable. We do expect, market to remain range bound for a while before breakout or breakdown.
What does it mean for our Investments?
Market establishing a base...
What does it mean for our Investments?
- Mutual Funds - If still invested in equities then time to bear the pain until we see a market turn around. No need to rush to start SIP unless we get positive trend reversal signs. If in cash/ FDs/ liquid funds then it is wise to stay on sidelines.
- Stocks - ONLY invest in strong patterns with good earnings guidance and DO NOT forget to have STOP LIMIT on open positions. When market is in correction, it will drag everything down with it. Check out our trade size calculator to manage your risk along with potential buy candidates watch list.
Market establishing a base...