Weekly Market Recap
In the past month, we have seen a meaningful rally from the October low, and the NIFTY crossed the first major resistance (blue horizontal line) last week which I expected to happen as I mentioned in my last blog. This week, indices remained hovered sideways in a narrow range but very well held up the last week’s gain which is positive in nature.
In the week gone by the benchmark SENSEX gained marginally by 175 points, or .27% to close at 65970, similarly, NIFTY added 62 points, or .32% to settle at 19794. While BANKNIFTY gained .42%.
Current Outlook
After passing through the first resistance, now NIFTY is facing another major overhead resistance (red horizontal line) as we can see in the chart below it’s the same level as when a torrential fall of a thousand points occurred in mid-October. From that point of view, it’s a crucial level to watch out for, without anticipating anything I would like to see how the market reacts at these levels.
However, currently, seasonality favors the bulls that might overpower the bears. Historically, we are in the strongest and most bullish time of the calendar year, which I define as particularly from October end through mid-January. That’s what history says. We still have some not-so-bullish periods during this time, but the overwhelming bias is to the upside. This doesn’t guarantee us higher prices for the next couple of weeks. Instead, it’s simply providing us with a seasonal tendency for stock prices to move higher. Seasonality is another secondary indicator, much like MACD and RSI. The primary indicator is always price action.
Though the seasonality is biased toward bulls, yet the price action at this juncture is indispensable. If the price breaks above the resistance, we can expect the follow-through to some extent unless that happens, we should wait patiently.
Conclusion
Along with the seasonality, the way the price is holding up the gains with some consolidation is enunciating positivity, but provided in the recent past the current zone has acted as a supply area so this may again induce the sellers. In addition, the market may try to cajole the investors while inching a few points higher in order to punish them. So, be patient and act prudently.
Feedback, comments, suggestions, or questions are welcome in the below comment section or at [email protected].
Be Patient; Be a Savvy Investor..!!
Pankaj