Weekly market summary:
On Monday, first day of the year 2018, market started off with profit taking, perhaps due to possible fiscal slippage by the government and market continued to be lackluster till mid week, however, finally bulls made a stunning comeback in the last two days that eventually settle the market at fresh closing high.
In the week gone by, Sensex closed by gaining 184.21 points at 34153.85, similarly nifty closed at 10558.85 added 54 points. Financials, metals, telecom, capital goods, pharmaceuticals and power stocks performed very well.
Current Outlook:
Before I get to that, let me recall you my blog dated 24 December 2017, where first time I made a disclosure and shared my views on particular stock, i.e. Maruti. I introduced the concept of buying climax and recommended short (sell) position for the traders at 9850 with a potential downside target as depicted in chart. Nevertheless, December sales figure of Maruti were quite impressive and market at their highs, however, Maruti stock is down by around 6 %, this is what the nuances of technical analysis helps you to get on the out of the crowd profitable trade.
Coming back to the current market outlook, let me start by gauging VIX (volatility Index), which is at 13.11 that indicates complacency or lack of uncertainty, Market breadth (Difference of Advances and decline) is very strong, and RSI (relative Strength index) is well below overbought zone, Hence combination of these prominent indicators along with price charts, suggest that there is more upside potential in the market. However, rising crude oil prices is a cause of concern to me that I have mentioned earlier also, which market is ignoring completely and proven to be resilient, I think that shows the internal strength in the market is quite strong.
Hence I am quite sanguine in my belief that market has a long way to go upside.
Conclusion:
I am prognosticating that next leg of rally could be steep like fast & furious before reaching out to a buying climax or entering into a consolidation zone. Hence, I would advise to pick technically strong stocks with a significant upside potential but never loss a selling discipline and keep a tight stop loss to protect your capital and profit.
You can write your comment and ask any query below here.
Enjoy the trend…, Ba a Savvy Investor..!!
Pankaj