Happy New Year to All
Weekly Market Recap
The stock market has entered the classic momentum run at the year’s end where daily gains become commonplace and it feels as if the market can never fall again. This week was no different as weekly, monthly, and yearly closing coincided with an all-time-highest closing level in NIFTY.
In the week gone by the benchmark, SENSEX ended at a record high of 72,240 with a gain of 1133 points, or 1.59%. Similarly, NIFTY surged to its highest level at 21731 by gaining 382 points, or 1.79%. BANKNIFTY also finished the week at an all-time high of 48292.
Current Outlook
Last week, I wrote about the climactic surge and its opposite reaction that we witnessed in the last penultimate week. The implicated action should have been the range-bound market going forward, but I also mentioned that if the price moves above the climatic surge, then it can easily go much higher as we saw this week.
Neither I want to over-anticipate the market, nor I would go against the strong uptrend unless I get veritable evidence of reversal. And I would not be surprised if a strong end to the year carries well into January. But, as I look around, I see a market that needs a rest, which is why it’s a good time to review how market declines develop and unfold. Suffice to say that, quite often the rising level of bullish sentiment eventually leads to a correction.
Moreover, a lot of the time, a big surge like this is a great marker of a price top. But there are quite a few instances when a big surge in share price is sustained without a significant correction. Those instances are harder to explain. However, late this week it appeared that topping conditions are developing. But remember that a condition is not a signal, and there is no telling just from this observation that this condition is going to decide to matter, neither it is prudent to ignore these conditions, especially at this juncture.
Conclusion
It is difficult to get a hint when the music is about to stop playing and the hot money starts pulling their money back out again. The current strong trend can continue, but I would recommend protecting your gain with sell stops and keep raising them as the prices of your holdings rise. Nobody knows when the correction will start but one thing is certain the longer it takes the deeper it gets.
Feedback, comments, suggestions, or questions are welcome in the below comment section or at [email protected].
Be Disciplined; Be a Savvy Investor..!!
Pankaj