Weekly Market Recap
Until last week, there was an impression that the market may continue to drift lower as most of the long-term indicators had turned down in-multiple-time frames and were suggesting a further decline in prices, on the contrary, we have witnessed the drastic and sudden change in the prevailing condition of the market in last two days especially on Friday as a result spin-off the impression.
In the week gone by the benchmark SENSEX posted a whopping gain of 1464 points, or 2.55% settled at 58991. Similarly, the NIFTY gained 414 points, or 2.45%, and closed at 17359. While BANKNIFTY led the advance with a gain of over 3%.
Current Outlook
In hindsight it is easy to analyse and explain the price pattern and, now it appears that good price bottoming has been done at least for short-term at the lower level. Almost 10 days NIFTY has spent in the range as enunciated by the shaded rectangle in the chart below, which is followed by solid breakout on Friday. In that case 3-4 days rally is quite possible. And I still believe this is not the final bottom, but who knows?
Foremost, the NIFTY is forming a pattern of lower-highs and lower-lows, which is quite apparent when we draw a decline upper trend line and two times in the past NIFTY made an attempt to move above that line, but those were failed attempts as marked by blue arrows. Now, again it has reached to that level, how the price would behave this time only time will tell. However, in the past two years market has been surprising us to the higher side, so once again rising vertically from current level is quite possible.
In addition, it is important to note that the VIX has again about to attain its lower reading which has inverse relationship with price. Though it seems IT stocks are offering good entry point for intermediate term.
Conclusion
At current level, the market is on the verge of surprising us then why we shouldn’t to use the opportunity to step aside and enjoying the movement unless it provides us the right signal to enter. Doing nothing and glare gravely is also count as an action because its our decision to act in such a manner. Hence, be patient.
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Be Patient; Be a Savvy Investor..!!
Pankaj