This is Sudarshan's blog - www.sudarshanonline.com. It discusses the technical analysis of Indian Stock Markets emphasising on online day trading and futures trading strategies.
After a 1000 point rally in the Nifty, good news has started coming in. Here is a sample:
More Good economic News: Jobless claims fall to four year low
Shanghai Stock Exchange made a Decisive Step
Why the Stock market just keeps going up
India on Cusp of New Bull Market
So we should be cautious as Good news flows when there is extreme optimism and that marks end of Bull Market as we saw extreme pessimism at around 4530 when the flood gates for 3900-3000 opened and everone was ready to sell everything, now we are seeing extreme bullishness as flood gates for 7000-8000 (we went 1800 points down from 6300 to ard 4500 so everyone is expecting 1800+ from 6300 which takes us to 8000) has opened which would mark an end of this recent Bull market, but as a trader we should go with the flow, trades both up and down and make money and avoid lossed.
But all were of the opinion that bear mkts do not end this way there is a phase of consolidation then accumulation and then slow move upwards this has been v-shaped like 2009 nifty charts are pathetic, even if you see europe the mkts consolidated before moving up, same was the case with U.S. in terms of world mkts Nifty and Sensex are like 1re and 2re stocks in the bse., in bear market we had relief rallies after every 10% corr but no correction in this bull mkt even after a 25%upmove what non-sense is going on, a corr would have made the mkts healthy and confirmed a higher bottom, which would give confidence to participate, fundamentaly all is not well, oil at 120 dollar, if it goes higher rbi will not cut rates, this is all manipulation, mkts have become like harshad mehta time, govts , rich and powerful and insiders are moving mkts.. but that is the story always.now we will make new highs, new ppl will enter, bubble will be created, they will lose money and the story will go on..
Nifty made a panic bottom of 4531 on 20th December 2011, subsequently a candle with long leg on 2nd Jan 2012, followed by a breakaway gap and a strong bullish candle on 3rd Jan 2012. This breakaway gap was proved right as Nifty moved from strength to strength. Then we find that Nifty made at least two to three runaway gaps as strong buying was seen across all sectors especially Banks, Infra, Real Estate and Metals. Now Nifty is at 5564 as on 17th Feb 2012 and exhaustion gap (which is yet to be proved right) appeared on charts. Secondly there is resistance corridor between 5600 to 5700 from which selling came in July- Aug 2011. Now there are two possibilities as under –1. Nifty should move as it is moving up and go to 5600 to 5700 level stay there and come down or move ahead by consolidating in this range for next level of say 6000.2. Or as appearing on chart exhausting gap (which is yet to be proved whether it is a exhaustion gap or a runaway gap) right at the resistance corridor and the continuous run from 4531 to 5607 there is a strong possibility of profit booking and if it comes we apply Fibonnaci retracement and then a 38% retracement target is 5200 & 50% retracement target is 5070.So time will tell which of these two possibilities come true or as Market always do the most unexpected there might be another third or fourth possibility which I don’t know right now. But I am with the second possibility.
The volume for this year on an average has been has been 3000Cr less than the daily average for last year which was also less than the last to last year. Is this actually a bull rally beginning... In agreement with rohit on the matter. Please let us know your views.
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