Weekly Market Recap
Volatility continued to rule the market as there were alternate days of advance and decline on indices. It appeared like a lot has happened but the net change on indices is almost insignificant. Although, the moves on both sides were quite sharp.
In the week gone by the benchmark, SENSEX remained sideways amid volatility and closed down by 136 points or .24% at 57060. Similarly, NIFTY was down by 69 points, or .4% to close at 17102. While BANKNIFTY closed with a marginal gain of 0.12%.
Current Outlook
As stated above the dominant feature on the chart is volatility. In the chart below the NIFTY is hovering but quite incisively in the range of 600 points for the past two weeks where 16800 and 17400 have acted as a support and resistance, respectively. The indicator RSI in the below panel is also lying in the middle of the range. It is indispensable to note that the price, short-term moving average 21-EMA (purple line), intermediate-term 50-SMA (green line), and the long-term moving average 200-SMA have fallen at the same spot. Normally, this happens when price consolidates in a range for quite some time after a steep rise or decline. This phenomenon indicates that either the change of trend (after distribution) or resumption of the existing trend (after re-accumulation) is taking place.
However, the cross-over by the price is a common phenomenon as price leads everything, but the cross-over by the moving averages is not so common. Recently, this happened at the end of last month enunciated by a shaded rectangle in the chart below consequently, the price rallied feverishly a thousand points from the intersecting point. Therefore, the given condition at least suggests a big move.
Moreover, as I mentioned in my last penultimate blog we have to see how the price reacts after earnings and so far, we have seen more negative reactions than positive ones, suggesting a difficult time ahead.
Conclusion
The current state of the market is not propitious for the buyers, however, tantalizing sharp rallies cause cajole and make it difficult to exit at a higher level. The sharp turnaround and vicissitude are the salience feature of the current market. Hence, it is prudent to keep your exposure low and wait patiently.
Feedback, comments, suggestion, or questions are welcome in the below comment section or at [email protected].
Be Patient; Be a Savvy Investor..!!
Pankaj