Weekly Market Recap
In my previous weekly note, I had said that we may see a nice pull back this week based on last week technical pattern. Much on the expected lines, the market started off the week with pull back on Monday and had alternative days of gain and loss; however, at the end bulls tighten the grip and closed the week on positive note.
Sensex ended the week with a marginal gain of 78 points or .21% at 37947; Nifty added 41 points or .36% to settle at 11470 and banknifty was totally flat with a gain of barely 4 points at 28128 in the week gone by.
Current Outlook
Normally, Negative divergence on indices between price action and indicators resolve in downward which were quite veritable until last week, however, it seems to be resolving upward this week, which rarely happens, but it can happen, although it has not yet been resolved completely, so I think we should wait for next week action to get it resolved on either direction.
The market seems to be over stretched and risk appears to be rising day after day, but upside momentum is still intact. Moreover, majority of the participant expecting market to come down, however, market mostly moves opposite to the majority’s expectation. Hence, I would continue to focus on the individual stocks which can give the breakout after a long period of consolidation.
Conclusion
The market is overbought, price is potentially forming a top, and the negative divergences are unanimous. Still, direction of the market is up. Hence, we should wait patiently for the companies that has beaten the expectations, made nice moves higher and could become high reward to risk trading candidates on pullbacks.
I welcome any feedback you may have about the content of this article.
Trade or Invest patiently..!; Be a Savvy Investor..!!
Pankaj