Market continues to follow path of least resistance which appears to be on the downside. BUT how far down will this market continue? Can we identify potential reversal areas from the charts? Lets see what charts are telling us...
Key information from below chart:
- Nifty well below MA(100) while MA(100) remains below MA(200) - Both suggesting bearish signs
- McClellan index remains below EMA(59) and trending down - Suggesting more stocks are declining than advancing on cumulative basis
At present, market is back in the range where it can get stuck for a while. Last time when market dropped in this range, it spent couple of weeks before breaking out of the range. We expect similar behavior this time as well. RSI is in oversold territory and short term bounce can be expected in next couple days. However, market could experience heavy resistance near 8000 area. But if it breaks through the resistance and eventually crosses above 8400 area then it will be start of next BULL leg.
Weekly chart is confirming the bearish trend. Market has support near 7600 area followed by 7200 area. RSI is not yet below 30 mark and hence not in oversold territory yet. MACD and PPO are trending down suggesting further downside.
All charts are telling us that further downside is very much probable but will be slow grinding process. At this juncture, it is wise to stay on sidelines until we get clear bullish signs.
What does it mean for our Investments?
Market continues to remain bearish...
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 continues to remain bearish...