Weekly Market Recap
Last week, I wrote “the issue with the VIX (volatility Index) combine with negative technical formation on chart does make me to think about further pullback or weakness on benchmark indices” (refer my previous blog, dated 10-sep) and this week market behaved precisely as I expected, on Monday and Tuesday we saw a sharp pullback on indices led by financials. However, market bounced off sharply in last two days and managed to recoup the 60% of their losses.
In the week gone by, the Sensex settled at 38090 after a loss of 299 points or .78%, Nifty closed at 11515 after a loss of 73 points or .64%, while Banknifty underperformed and lost 317 points or 1.16%.
Current Outlook
This week, VIX spiked up to 15.45 (up 10%) till Tuesday, cooled off in last 2 days, but remained at last week level and I think the issue with the VIX is still viable. Although, market has bounced off sharply from lower levels, but that bounce was largely restricted to those stocks which had fallen sharply. Moreover, I assume this bounce to be more technical, which is exactly at 38% Fibonacci retracement, as it is depicted in the chart below.
During sectorial-analysis, I have found that there are group of stocks among different sectors which are showing a sign of fresh weakness, on the other hand there are stocks which have bounced off nicely from their technical key support levels that reminds me of relative rotation is on play.
At present there is no indication that this bounce is start of a new rally of the market, however, relatively stronger stocks having best reward to risk ratio can be considered as a buying opportunity.
Conclusion
The delineation of the phases of the technical structure indicates that there is moderate probability that market may go back to its last peak to form a double top, but I am not interested in chasing the indices rather I would focus on individual stock which are giving a nice entry post pullback. Let see how the market react next week.!!
I welcome any feedback you may have about the content of this article.
Plan your trade; trade your plan..!! ; Be a Savvy investor..!!
Pankaj Saini