Weekly Market Recap
Last week, I expressed my concern about the sustainability of angle of escalation on NIFTY since September 2019 low. And, NIFTY seems to have taken my concern seriously, as a result this week NIFTY ebb off it’s high a bit sharply, however, it got reversed and recoup the losses on the past Friday.
In the week gone by, the benchmark SENSEX close down by the loss of 106 points, or .26% at 41575, similarly, NIFTY was marginally down by 26 points, or .21% to close at 12245.
Current Outlook
The recovery we saw past Friday was quite impressive and tantalizing, but that developed a one more negative divergence between price and VIX (volatility index). The VIX is at the low but price is not at highs. Though, divergence it succinct, still we cannot refute it. Most importantly, the VIX is at 10.52 and this has been the lowest reading in last 10 years that tells me that market top is very close. I have also noticed that gold and crude oil prices have turned up significantly in last few days that has always been a disconcerting and not propitious for equities. Consequently, that should alleviate the stock prices going forward.
Also remember, the market tops have always been formed unheralded, but this time most of us are clamoring for the correction, so there is descent probability that indices may continue to move up unless they get frothy. Moreover, the dominance of 4-5 stocks on index movement is quite dangerous configuration which should get resolved sooner than later else we may see upheaval situation in market. Hence, outlook appears to be quite perplexed.
Conclusion
The trend of the market is up, and the condition is overbought. Next week I’ll be looking for continued light trading with prices edging sideways. As I concluded last week, if this rally continues for a few more weeks, I can say emphatically that we’ll see an attention-getting correction. As vertical advances are usually doomed to collapse, and the extra-bullish sentiment is part of this setup. Therefore, be alert.
Happy New Year…!!
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Stick to your model..!; Be a Savvy Investor..!!
Pankaj