Tuesday, September 7, 2010

Life at 5600

The Nifty touched 5600, rather easily today. As most readers know, this is a 31 month high - highest since Janaury 2008.

Should investors buy now? My view has been that investors should buy only on dips. Such dips occur regularly. If we are not in a dip now, then wait. Patience pays.

Traders should go with momentum, which is clearly up. I am giving below a monthly chart highlighting similar patterns in 2007 and 2010. Reader comments are welcome.

6 comments:

rajv malik said...

namaskar sukhani ji, you say-

Traders should go with momentum, which is clearly up.

you also say-

My view has been that investors should buy only on dips.

but on cnbc today i heard you saying that it is time to buy puts.

now how to follow you correctly ?

kk said...

RESPECTED SIR
YOU TOLD US, WHENEVER WE HAVE SOME INDECISIVE CANDLES IN THE MAKING, THAT MEANS SOMETHING IS GOING TO HAPPEN. AND THAT'S WHAT HAPPENED IN JULY AND AUGUST ON MONTHLY CHARTS .

ONE MORE THING YOU SAID, A TIME COME WHEN A SERIES OF OUTPERFORMANCE BECOMES A BUBBLE . YOUR REMARKS WERE IN CONTEXT OF GOLD , THE SAME THING CAN HAPPEN TO INDIAN EQUITIES.

Bubla said...

I guess there will be one final blowout in nifty which could take it to somewhere in the region of 5750 and from there on we can expect some sharp correction.This happened in 2007 also. So let's keep our finger crossed

NITIN DAMLE said...

Sir,
It's clearly rising wage formation which indicates that sharp correction may be round the corner, after some mad rally.I think we should move into cash by selling into this expected big up move.
Nitin Damle

Madhav said...

Similarity in pattern

Sir, there is similarity in pattern but different base formation.Only thing I can derive is a correction ahead with chance of huge spikes upwards before correction. All in all upward trend is about to finish

Girish Desai said...

I like your comparison of the monthly charts from 2007 to 2010.

I have started trading from May 2009 - so may be you are the right person to answer this question.

How do you compare "retail" trading interest back then and now?

Most rallies (as I have read) have a blowout phase and end when retail comes to party in a big way.

Right now it seems like in both US and India retail Mutual Fund investors are cashing out thinking that the "rally from heaven" may not last. May be if market gets to 6000+ they will feel the heartburn and come back again.

I read somewhere that markets don't fall when everybody is circumspect and buying puts. Market falls when everybody is "all in" and not many left to buy.