Tuesday, July 6, 2010

Markets Ready for big Move

This is an excerpt from the commentary and charts given yesterday evening, in our newsletter for clients:

Markets at tipping point, ready for big move

“If we begin with certainties, we shall end in doubts; but if we begin with doubts, and are patient in them, we shall end in certainties.”

- Francis Bacon.

For the past 10 days, market movements have been tentative and uncertain. Now, we are coming to a point of decision. Today's price move suggests that a trend is likely to emerge soon. Why?

The Nifty has been moving in a narrow range, but today's range was narrower than the 'normal' narrow ranges. Nifty futures moved in a range of just 30.2 points. In the current year, there were three other occassions when the daily range of nifty futures was around 30 points. Each day was followed by significant trends. Here is the chart:
 

One to two trading days after these narrow ranges we have seen big trending moves. In 2010, there were three previous instances of 30 point ranges. All three eventually moved down but this is not a pattern. markets can go up or down after such ranges. The main point is: they move.

4 comments:

Ankurbbhatt said...

What a coincidence Sudarshan, My gut feeling is the same... I have written the same in my blog ! I hope I am getting better at trading ....It was quite a reassuring remark ! Thank you !

men said...

Dear Mr. Sudarshan, this is with reference to your post "why bulls make money", the above is true for the cash segment, what about fno then? Thanks,

Pankaj Shukla said...

Dear Mr. Sukhani,

Please pardon me, if you find it improper for me to ask a question here.

You along with other channels had today given a sell call for Aban offshre. Of course, the share does not have to follow the call of any one. But could you please explain why dit it behave the way it did, inspite of strong sell signals. And, furhter, what do you expect the share to perform on the 7th??

Many thanks,

Pankaj Shukla - Ahmedabad

gourv said...

Hello Sir,
Its not possible to trade the same way say with 1000 crores as with 1cr.
Because then Entry and Exit will be quite difficult.Then how do people/hedge funds with huge money trade...?

Regards
Gourav