Wednesday, December 5, 2012

After the Lok Sabha Vote

Today evening, the Lok Sabha (House of the people, lower house of Parliament) voted in favor of FDI in retail. Our interest lies in the reactions of the market to this piece of news.

The Nifty has been in an uptrend. For the last three days, the trend has been choppy with the Index recording narrow range days. The narrow range days represent contraction, which suggests that a big expansionary move is coming.

Now we link the news to the cycle of contraction and expansion that the market goes through. If the news is bullish for the market, then a big expansion / breakout is possible because three days of contraction has set up the environment for a big move.

Maybe the markets have discounted this news in advance. In this case, the markets should start a decline, which will also be worth a trade.

Summary: The news event comes after a three day narrow range, setting up the market for a big thrust, up or down. Just follow the breakout / breakdown.

2 comments:

Dinesh Rishi said...

Thanks Sir,

Enjoying the breakdown :D

puru said...

Breakdown turned into breaKout which one is real.....?