Markets Ready for big Move.

This is an excerpt from the commentary and charts given yesterday evening, in our newsletter for clients:

Markets at tipping point, ready for big move

“If we begin with certainties, we shall end in doubts; but if we begin with doubts, and are patient in them, we shall end in certainties.”
– Francis Bacon.

For the past 10 days, market movements have been tentative and uncertain. Now, we are coming to a point of decision. Today’s price move suggests that a trend is likely to emerge soon. Why?
The Nifty has been moving in a narrow range, but today’s range was narrower than the ‘normal’ narrow ranges. Nifty futures moved in a range of just 30.2 points. In the current year, there were three other occasions when the daily range of nifty futures was around 30 points. Each day was followed by significant trends. Here is the chart:

One to two trading days after these narrow ranges we have seen big trending moves. In 2010, there were three previous instances of 30 point ranges. All three eventually moved down but this is not a pattern. markets can go up or down after such ranges. The main point is: they move.