Buy when base building starts.

When markets fall sharply and dramatically, the desire to buy comes out strongly. But, this is not a good idea. Traders and Investors cannot buy randomly. There must be a method behind taking any trade.

Once markets show signs of entering into a bear trend, as our market is now doing, then buying should wait till the decline ends. How do we know that markets have stopped falling? The only way is to wait for base building. This process requires markets to go into a range after a significant decline. When prices break above range resistance, the first signs of buying will emerge.

A long term correction

The Nifty rallied from 2250 (october 08) to 6350 (october 10) in a bull market that lasted about two years. This large rally will have to see a correction.

On TV, as well in this blog, I have suggested a possible downside target of 4000 in the Nifty. The 50% retracement of the up move comes at 4300. A 61.8% pullback comes at 3816. My target for 4000 is roughly mid way between these two correction numbers. The intent is to identify the market direction which should see the Nifty in the low 4000 range. No once should try to predict the exact levels.

Coming back to Life

I was busy in many othre activities and wih a lot of regret, I did not get sufficient time to write this blog.

I hope the blog will come back to life, with today’s post as a start. This brief post is just to tell you that the blog is alive and kicking.