Wednesday, August 31, 2011

World Markets in strong uptrend

Indian markets will remain closed tomorrow also. But, so what? The S&P Nifty now trading on the CME is at 5080 (at 7.56 PM). That is a good 75 points higher than the close on Tuesday in the NSE. Markets continue to move up, in what should now be considered as an uptrend for most world markets.

The Intermediate trend remains down. But, this trend changes to up if and when the Nifty closes above 5200 which was an intermediate top on the way down. The Markets offer a number of possible scenarios:

1. The bear market / correction may be over. If this is so, 4700 becomes a bear market low. We should expect the Nifty to go above 6350 at some point of time.

2. The current rally is a normal correction in an ongoing bear market. If that is so, then the rally should face resistance around 5200, and, later at 5735. The problem is that the bear covering rally can continue for a long time, and a bull market will be announced only if the Nifty crosses 6350. But, trading tactics should be different. Once the Nifty closes above 5200, then 4950 becomes a stop. Investors should go for buying whenever buy signals come in. Traders should be long even now since a short term buy signal was given when the Nifty made a 200 point advance on Monday.

3. Markets move into a trading zone with 4800 as support and 5400 as resistance.

Readers are welcome to offer their own scenarios, with their opinion on which scenario is likely.

3 comments:

SWEETY said...

The most probable likely scenario is a forming trading range between 5200 - 4700 range... yes, nifty might try to go 5400- but heavy supply is expected.... may be hitting 5400 will be like a flash..

So, there are two things we need to consider - 1. supply zone around 5200 - 5400 how big the supply would be - 2. Sustained continuity of demand above 5000 ( yes 5000 ) - above Nifty 5000 we might see demand would be weakening gradually.

My take is: unless we see a strong consolidation & accumulation around 3600-4000-4500 levels over a period of time, any upper move over and above 5000 will be faded away quickly.

Remember the bull jump from 2009 May is the ** most hated rally** in the history of Indian capital market - and even though every theorists insists there is no need to fill in the breakout gap of May 2009 - Market will fill this gap - unless that is done sustainability any rally will be challenged strongly.

This is my take - I may be wrong in my assessment - My actual trades are strictly based on technicals irrespective of views on markets

jigs said...

Sir with my little knowledge and my opinion is in bear market, market makes shortterm bottom, and rally to 20ema most of the time, and consolidate there and reverse back to make new low and this time nifty made panic low of 4720, than rallied, but 20ema at 5053 and more market will tell us

Rushabh Shastri said...

Technofunda study says nifty should be in range for 4600/5200 for coming week and after banking policy result on 16th septmeber market move look for any other points to break....