Weekly Market Recap

The week started off in line with expectation. After Monday downfall market gapped down again on Wednesday post Christmas holiday, major index Nifty traded 120 points lower within few minutes. It was looking like “Here we go again”. But like in past, buyers emerged and both Nifty and Sensex closed the day with gain and rally continued till Friday.

The benchmark index, Sensex closed the week with a gain of 334 points, or .94% to settle at 36076, similarly, Nifty ended with a gain of 105 points, or .98% to closed at 10859.

Current Outlook

It seems like that Nifty has established a new higher support at 10550, which is positive technically, as we can see in the chart below (click on it to expand). So the next major question is how high might Nifty bounce? It seems to be difficult to predict. In last 3 weeks, Nifty has reversed or ebbed off abruptly from lows and highs without leaving any technical clue. This is one of those time when we are seeing whip-saw on technical indicators. Most of the signals are getting beat up at final stage, it is quite frustrating. Isn’t it? In this time rule-based trading or investing model is underperforming in such a large moves. However, I believe its testing time to stick to our rules and models rather to get trap in horrible human frailty called emotions. Even in past bear markets like in 2000 and 2008 we have seen a sharp bounce-off of over 10% only to flush out later.

Hence, Current scenario is not looking quite favourable at least in short term for both bulls and bears. Although, so far, this recent advance seems to be short-covering to me.

Conclusion

In a good bull market there are many pullbacks to flush out the short timers and cleanse the market.  Similarly, a good bear market will have cleansing rallies to flush out the bottom pickers and short timers. I, still continue to believe that we are in bear market and market is just showing the end of the first downside impulse. Hence, Instead of rolling around with the market, we should try to watch the market moves to understand them a little better.

I welcome any feedback you may have about the content of this article.

“A Happy New Year to all”

Be patient..!; Be a Savvy Investor..!!

Pankaj