Weekly Market Recap
In yet another volatile week we have witnessed a quite wild swing on the indices. It appeared that a lot has happened, but net change is indecisive. First two days, NIFTY plunged significantly and then rebound sharply to recoup all the losses and again reversed to the downside on Friday. There has been a tug-of-war between buyer and seller where the buyer doesn’t want to lose the grip at a lower level while the seller not taking any chance and seem quite eager to sell at a higher level.
In the week gone by the benchmark, SENSEX lost 491 points, or 0.84% to close at 58152, similarly, NIFTY shed 141 points, or 0.81%, and settle at 17374. While BANKNIFTY was down by 0.7%.
Current Outlook
Last week, I wrote about the three phases of the market: accumulation, distribution, and consolidation. And to me, so far, the market has been enunciating the characteristics of distribution, though the price is positioned in the range where both buyers and sellers seem dominating at the lower and higher end of the range respectively, reflecting really a tight balance between buyers and sellers. However, the way selling intensifies at a higher level along with very weak market breadth does indicate that eventually, the seller might be more aggressive in the forthcoming days.
I might sound awkward, but I have found and realized the erratic, strange, and untoward behavior by the market. The chart which appeared bullish after the correction suddenly turned bearish, even after a solid and decisive breakout the bearish reversal pattern is formed at a higher level. This behavior is not confined to a few stocks, but mostly high momentum stocks who have been outperformed the market so far, are demonstrating the same pattern. That solidifies my conviction that we are in the distribution phase.
Though anything can happen, it is quite prudent to analyze the volatile periods. As there are signals out there to help us to understand the impending movement of the market especially it helps us to identify the REAL moves from FAKE moves. As I study and continue to learn, I believe we can gain valuable insight from analyzing the chart patterns. And at present the message is not good for the bulls, hence the outlook is highly cautious.
Conclusion
It is indispensable to note that when the bullish chart pattern concludes in bearish it is quite pernicious in nature. As I concluded last week it is better not to have much exposure on the long side and wait patiently. Perhaps we may see a deep correction, quite possibly a lot deeper.
Feedback, comments, suggestion, or questions are welcome in the below comment section or at [email protected].
Be Patient; Be a Savvy Investor..!!
Pankaj