Reading between the lines…

This is my first blog so I was little bit confused. Whether I should start writing blog when the market has corrected almost 10% in last two weeks?? Is this the right time to start?? Then I realized that there is nothing like right or wrong time in the share market. So I am starting from today itself. Through this blog I am going to share my views, thoughts and recommendations about financial instruments like shares, commodities, forex, mutual funds and insurance.

Now let’s start with the share market. In 2003 Nifty was around 925 (Sensex-3000), from that level it started going up and made a top of 6300 (Sensex-21000) in the year 2008. Due to Global financial crisis, we saw a sharp correction in the market and nifty made a low of 2250 (Sensex-7700). After that we saw a bounce back to up to 5300 (Sensex-17700). Is this a bounce back or fresh rally in the market?? In my opinion this was just a bounce back. All the momentum indicators were gone in oversold region so that bounce back was expected. Always remember correction in bull market and Bounce back in bear is always faster than the main trend.

In last 10 months Nifty has appreciated by more than 100% from bottom (2250 to 5300). If you look at the chart below, you will see that the market is making new high but RSI is not making new highs and volumes are also going down. In technical terms we called it Negative Diversions. In last two weeks Nifty has corrected 10% and took a support of 4750-4800 levels (Sensex -16000). This week nifty has also broken 21 weeks EMA and closed below that level. Now the chances are that, in the next week or two Nifty will try to come up once again to 4970-5070 range (sensex-17000).

If Nifty takes a good resistance at 5070(sensex-17000) and again it comes down below 4760 (sensex-15980) that will confirm the new sell off in the market. Then Nifty will come down to fill the Gap of 3700-3800 (Sensex-12500). So be cautious in the market and Exit your long positions if Nifty breaks 4760 (Sensex-15980) once again.

These are the top 10 stock of Nifty on the basis of their weight age.I have mentioned stocks in red who have already given sell signal.

Lastly, this is my first blog so please feel free to comment and in the process help me improve my blogging skills. Happy Trading!!!!!!