Raunakji,
I feel Friday's bounce in Nifty was a typical bear market rally. Bear market rallies are always fast & furious to the extent making one believe that downtrend is now over, only to fall back again. Dow has closed in red on Friday inspite of good GDP nos. which is as big a warning for bulls as it gets. Normally Dow should have been in green by over couple of hundred points after such good news specially since Dow has fallen so much in last few days. On the plus side Nifty has closed on Friday with Hammer ( after a downtrend ) which is bullish. So far so good. Now only if Nifty can close on Monday with a green candle & in doing so it can take out 4950-4960, can we say that this rally is for real. Otherwise Nifty will be back to southward journey again.
This is my thinking & I could be wrong. I would be happy to get your views & insight into this.
Cheers !!!
Alok Tewari
Alok,
There are few things I wanted to say,
1. We are not in a bear market. That's why I don't think any rally here is a bear market rally. Nifty is going to make a new high this year and I strongly believe in this. The market would change it's stance from Bull to Bear when 4500 and more importantly (3900) get's taken out decisively.
2. TA assumes that the trend will continue in motion till signs emerge to suggest otherwise. As of now, there is nothing that suggests this. It is human tendency to get shaken up by such corrections and volatility. How much has been the rise since April and how much has been the correction recently ?? As traders and investors we should not draw conclusions so early.
3. What Dow is doing currently is completely different. They have a structure economic problem which is far from getting over. The recent changes in US policies do indicate that. Hence, before linking Dow with Nifty, we need to consider the economic structure of the countries in perspective. The transition of growth and benchmarking has to take place from the US to the Asian countries. Hence, the impact might be there initially, but It wont be a permanent one.
4. The RBI quarterly review released yesterday indicates that in our economic system, things are progressing well and though monitoring is still been done, there are no apparent signs of any weakness.
5. Technically Nifty has formed a high wave candle (indecision of movement) on Thursday and a strong hammer on Friday. Hence, clinging on to these levels is not such a bad idea. Volatility will be there and hence trader's should stay out. But, for long term portfolio, it is not a bad idea to accumulate stocks. If the market signals a bear move ahead, then we can liquidate always.
But anticipating what the market is going to do is always fatal.
Tc.
