Sunday, February 26, 2012

Markets in consolidation

After a blistering rally that took the Nifty up by more than twenty percent, markets are in a stage of consolidation. While there is logical support at 5400, it is for the market to decide where support will come, finally.

A more important question is: is this a bull market? The answer is based on market behavior so far - prices above 200 day ma, pattern of higher highs, higher lows, and, gains of more than 20% from its lows. Therefore, based on this evidence, I aasume that the current decline is a correction / consolidation in a newly born bull market.

Even as we are bullish, short term traders should buy only when the trend changes to up. The signals will come on short term time frames.

An interesting piece of news is about the sesa goa - sterlite merger. While there are many reasons to justify this action, I am not a fan of financial engineering as a means of value addition. It is hard work that adds value, not investment bankers.

4 comments:

Dinesh Rishi said...

Sir,

Thanks for the update

Even as we are bullish, short term traders should buy only when the trend changes to up. The signals will come on short term time frames.

waiting for ur green flag

Sir Hint plz which can be first signal on short term time frame.

Kirti Content Solutions Pvt. Ltd. said...

Sir,

Thanks for the insight.

The market looks headed downwards again today...if 5350 does not hold today, then is it a firm signal to go short?

Warm Regards
Madhur

Krishna said...

This is important that prices , as of now are above 200 MA & a retail trader should use all dips as buying opportunity in delivery through front line shares so that peace of mind also remain intact.

A good trader or businessman will first ensure the peace of mind because if he or she is restless for his/her open position for any reason then one will not be able to carry on with the trend & would quit midway & hence wont be able to pick the profit.

We wait patiently for losses to become bigger but act restlessly & keep profits smaller.

Back to point, 200 MA is intact, 50/100 MA bullish cross over is intact, it should be buy at all dips.

Sukhani Sir, please correct me where required.

Regards

Gulshan said...

Sir,
Pl. refer to your book, Page No. 182, Second Para, "In spite of small ..... ......"

Can you please describe how to calculate 10 and 100 day volatility and how to compare them in terms of percentage. I mean to say that this concept is totally new for me and I want to learn it.

Please help.

Thanks