Friday, September 24, 2010

Even bull markets will correct

A DOJI identified two days ago seems to be suggesting that a short term top is in place. For Nifty futures, 5950 remains the first level of support. A breakdown then shows 5880 as the next lower level of support.

Just a few days ago, we had this super strong momentum in the Nifty. The impression was that 'this time it is different'. Now, two days of range bound price action tells us that buyers are not willing to pay higher and higher prices. As traders, we know that range bound days are not profit making days. Moreover, corrections are difficult to trade.

The Market is ready for a correction. It could be deep or shallow, that is difficult to say. But, whatever decline comes will confirm that it is never different. I am of the belief  - "all markets correct". We just need patience.

Mid cap and small cap stocks have already started a process of correction even while the Nifty was going up. It is possible that this group may also bottom out earlier than the Nifty. Not all stocks, but some of them.

This post doesnt actually provide a trading strategy. It shares with you, how and what I am thinking.

5 comments:

LIC Agent Noida said...

Thank you sir!!

LIC Agent Noida said...

dear Sir,

The big money always came when the trader shorted the market at the end of bull market.. Like Jesse liver more in 1920. Is this the time? Nifty PE is 25+ maximum is 27. what will this bubble called?? if this is a bubble.

Your Answer is much awaited.

rajv malik said...

sudarshan ji,

who you think would have actually benefitted from this rally which no one was able to predict some weeks/months back ?

could you and your clients benefit immediately ?

don't you think a majority of even traders and common retailers missed this rally ?

would you suggest these people short this market at some level and benefit ?

rocky said...

Yes Indeed no doubt correction will come, but my feeling is it wont be a sharp fall, this looks like a very strong rally and a sustainable one, there are various talks doing rounds where some say global economy is out of recession and some we are not yet out of recession yet, the thing here to note is either we have come out of recession or coming out of it not "Going in to it ", thats good enough news for me n rest out there. I Guess we have been into a bearish mind set long enough and this rally has quite taken us unaware.So, i strongly feel buying into this market on dips is the way to go. Im more of a bear than a bull, but now my senses tell me to transform into a bull.

mbansalicy said...

what are options greeks.how can we use greeks factor in our trading plan to make more profit.