Weekly Market Recap
In my last submission, I said that market is expected to be quite volatile going forward and it would not be easy specially for traders to absorb such a high volatility. Well, precisely in line with my expectation this week market turned out to be quite volatile but negative instead of positive.
In the week gone by the benchmark SENSEX plunged 476 points or 1.21% to close at 38990, however, NIFTY fell extra notch and shed 313 points, or 2.69% to settle at 11333. While BANKNIFTY which was quite resilient and did well in past two weeks once again appeared to have lost its ground and led the downfall with a loss of 1512 points or 6.17%.
Current Outlook
‘The way up is the way down’ means all idealistic longing or the way up is bound to ultimately give way to a reverse movement or the way down, highlights the indispensable relation with the law of gravity, however, the force of gravity in stock market keep varying. Sometimes, the correction of 5% appears quite big and noxious, while at times correction of over 20% is toward. If you are a loyal reader of my weekly blogs then you must be aware that through-out second half of 2019 I had maintained my bearish stance, though the market was inching up, but as per my analysis I had no reason to change my stance. The outcome we all know. We saw unprecedent cascading fall of over 40% in the market since Feb to March. Like I wrote earlier ‘the most essential thing in life is not visible by our naked eyes’ we have to have develop that sense so that we can see them. Here, I like to quote a line from the movie Ford v Ferrari, “look out there, out there is the perfect lap; no mistakes, most people cannot see it, but it is out there”. I would say most people even don’t know it is out there, but it is.
Now, coming back to the outlook, in such a precariously volatile environment, the matrix is changed, the equation is changed, and the dynamics have been changing frequently, so as my stance. I admit that since last few weeks I have been changing my stance quite frequently because it’s the need of the hours. Until last penultimate week, I was talking about possible double-top formation that was refuted by the market last week. Now, on weekly chart it has formed a bearish engulfing candle which is again pernicious in nature, as we can see in the chart below the cardinal tops (blue arrows) in the past have been formed by bearish engulfing candles. All the previous four (blue arrows) signals resulted into sharp fall. Moreover, VIX which was drifting lower until past week also rallied substantially and set to escalate further. Adding to the woe, there is sudden vicissitude in market breadth which has started to deteriorate significantly that prodigy downfall in the market.
Unequivocally and a bit quixotically, the outlook turned out to be negative for coming week.
Conclusion
The recent movements are full of shenanigans and conundrum is getting impregnable which can only be dealt with paramount of patience, sometimes it is boring, but perseverance is the key to succeed. Like I concluded last week never ignore your exit discipline.
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Analyse Up and Down…! Be a Savvy Investor..!!
Pankaj