Monday, November 10, 2008

Has the Bull Market Started ?

After a reversal day recorded on Monday, October 27, a greater than 3% gain was recorded today (November 10). Does this provide the much needed confirmation for the start of a bull phase ?

Today's gain came with lower than average volume. This does not provide the neccessary confirmation. The gains should have come in with higher than average volume. In fact, a similar pattern was developing in the USA, and gains did not have volume confirmation.

The intermediate trend remains up. This is the trend that traders should be following. We should never anticipate turning points against momentum. This means, when the markets are moving up, we do not decide where the up trend will stop. We let the market tell us when it wants to reverse.

A bullish pattern seems to be developing in the Nifty. This is an inverted head and shoulder which has bullish implications.A close above 3240 will confirm this pattern. A similar pattern was under development when the Nifty was in the 4200 - 4500 range, but confirmation did not come in and the pattern was eventually cancelled. If this pattern foes get confirmed, the targets may be 4000+. Now, once again, we let the market do the talking & the thinking.

My point is: while momentum favors the bulls, go with long positions. Avoid going short. When short term trend turns down, then exit long positions.

Have Fun!

3 comments:

Vivek Rattan said...

Hello Sir,

So TRUE. I've been on the losing side from last 3 days, stopped out in 7/7 trades which i took trying to anticipate the reversal. (Was short on the mkt).

Quoting you once again : "We should never anticipate turning points against momentum. This means, when the markets are moving up, we do not decide where the up trend will stop. We let the market tell us when it wants to reverse."

Tks once again for your continuous guidance.

Rgds.

-Vivek Rattan

s.k said...

The fundamentals are weakening and January results will speak that loud.No TA pattern is likely to take Nifty beyond 3800.Best scene is 3350. Let's see

myinvestorsplace said...

Bull markets are characterized by optimism, investor confidence and expectations that strong results will continue.

MyInvestorsPlace - trading, value, investing, forex, stock, market, technical, analysis, systems