Weekly Market Recap

Last week, I wrote, we may see arrange bound action this week in between high and low of last week, and this week price action was mostly in line with my expectation. After having a roller-coaster ride, indices closed with a net change of less than 1 percent for the week.

In the week gone by, the benchmark SENSEX ended with a loss of 231 points, or .62% at 37350, and NIFTY lost 61 points, or .56% to closed at 11047.

Current Outlook

Gone by week began in Tuesday and ended with significant decline, but I was not expecting NIFTY to be broken down below last week lows in any time soon, as expected for next two working days market tried to recoup the Tuesday’s loss. I believe, the market may continue to hover side-ways for next few days. Currently, I can say, we have seen a short-term bottom, and the NIFTY may again try to reach towards last week’s high that coincide with 200 SMA (simple moving average) as depicted with black line in the chart below. The horizontal blue line drawn on chart, the same as drawn last week may act like a strong resistance for next few days, if price can exceed above that line, would imply a further rally towards 50 SMA (green line). However, to me that doesn’t mean pull back or correction is over, it is just halted for a time being provided sentiment became quite negative and market tends to behave contrary to sentiments.

Moreover, in last 4 weeks we have seen a severe deterioration in market breadth that’s need a pause for some time, as market never moves in straight line in either direction for extended period of time. Within uptrend and downtrend market has a tendency to move randomly, this is the nature of the stock market. Hence, current outlook most likely to be a continuation of range bound scenario at least for new days.

Conclusion

Oversold, short-term indicators, combined with this week price action, make me thing that there is good case for believing that the decline in short-term is over. Nevertheless, we should be alert for continuation of the rapid direction changes like we have experienced this month. If the panicky indecision is still prevent next week, we shouldn’t be buying anything, rather wait and watch would be prudent.

I welcome any feedback or suggestion you may have about the content of this article.  

Be Patient.!; Be a Savvy Investor..!!

Pankaj