Sunday, September 25, 2016

Range bound markets provide buying opportunity

The markets failed to break the previous high and are back in the 8640-8850 trading range. There are several scenarios which can happen from here and let us take a look at each of them.
1. Corrections are always 3 legged, 2 legs down sandwiching 1 leg up aka ABC correction. As per this we are in tricky B wave which may be over or may get over at anytime. First leg down was 280 points till 8688 from 8968.Second leg up till 8893 a retracement of 73 pc and a final leg down till 8613,8537 or 8440.
 2. The second alternative is that the markets go straight up. A break of 8968 will lead to test of fresh new highs.
3. We continue this range bound exercise for few days more. A break of 8640 can lead to 8440 and a break of 8850 will lead to 9050. Note the significance of plus minus 200 points, 8440 is a significant support and 9119 is a significant resistance.
4. The results season will start in 2 weeks and the results month is usually a range bound month.
The most likely scenario is some correction and then fresh highs by Diwali. This will fulfill the rangebound criteria as the same levels will be traversed in both up and down directions.

Buying on dips and booking profits partially is the best choice in the current scenario. Global cues will be benign for sometime to come.

Sunday, September 18, 2016

Decisive week ahead

The coming week has the US Fed meeting coming up and if there is no hike in rates, expect a swift upmove.

1. The market continues to be stuck in a range and a close above 8848 is first sign that the range will be broken on upside.
2. 8650 forms the lower end of the boundary. This week, the fed meet will be on Wed and we will know by the time markets open for trade on Thursday.
3. The rally will be swift and we will see new highs even if a correction happens. The reason for the rally is liquidity. Till liquidity flows in, rally will continue.
4. Break of 8650 will lead to 8450 8500 range and break of 8850 will lead to re test of previous highs.

I would book profits in mid caps and invest the profits in large caps. Always, the stratwgy of reducing cost price works.

Sunday, September 11, 2016

Every correction is a buying opportunity

The markets corrected after hitting the resistance zone. Every correction is a buying opportunity.
 1. The Technicals are at play out here. After hitting the expected resistance zone, the markets are correcting.
2. 8650 was a strong resistance and the whole 8540-8650-8720 will provide a very strong support.
3. The global cued have suddenly turned negative with prospects of rate hike in September by the US Fed.
4. Partial profit booking is a must in midcaps which have gone up from the Feb lows.
 5. We are in the 5th wave up from 6826. The first wave was 1200 points and we should go above the previous top of 9119.
It is a buy on dip market, with profit booking at appropriate times.

Sunday, September 4, 2016

Heading into a Resistance Zone

The markets finally broke the shackles of the resistance of 8550-8650. The good news is that the congestion zone is broken, the bad news is that the next resistance zone is near by.
1. 11 out of last 14 September s have been kind to the markets, this year could be the same.
2. The breakout is significant as it comes after several weeks of consolidation.
3. Last few weeks midcaps rallied and front line stocks were range bound now it may reverse.
4. One needs to lock in profits and non convertible debentures are safe instruments yielding 9 to 10 pc div yield.
5. Globally, Yellen may raise interest rates.5. In the last rally before peaking out at 9119, 8850 was a significant point and market may get resisted here.
6. Time to stick to quality stocks and avoid the telecom sector.
7. Auto stocks are rallying as the sector is seeing good traction.8. Gold bonds of RBI are 1 good investment option.These are times to be in the markets while at the same time one must lock out profits.