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The Nifty failed to hold its head above 2800. This, inspite of support from international markets. We are in the process of moving one step forward, and then retracing that step to end up at the starting point.
The Nifty has significant resistance around 2800. It needs to cross this level to make an attempt towards 2950. For the past week, we have strong support from international markets. Now, this support will wane as these markets begin a correction / consolidation. With every passing day, the odds are getting stacked up against a thrust towards 2950.
A trading range market causes sudden mood changes – as prices move up from support, there is euphoria that this is it, and when prices retarct from resistance a sense of pessimism comes in. So we should view the market as a range. The range boundaries are about 2550 to 2800. Inside this range, the Nifty will have its little games, but a trending move is expected on a breakout.
I hope to add more notes, by the morning.
Cheers!
A Successful test ?
With the American markets rallying nicely overnight, we can assume that India will not be left behind. Then, the small dip yesterday (Tueday) was a pullback in the ongoing uptrend. The dip was in fact a (successful) test of the up move.
If the Nifty is able to close above 2800 resistance, we may see it advance slowly to the next resistance level at 2950. But, for traders, there is no need to do such forecasting. Just follow the market momentum, which happens to be up.
Remember, the long term trend is down.We are in a bear market.
Gary Shilling, who correctly forecast the housing bubble has this to say: (courtesy John Mauldin, Investorinsight.com)
The deepening recession and spreading financial crisis is the beginning of the unwinding of about three decades of financial leverage and spending excesses. The process will probably take many years to complete as U.S. consumers mount a decade-long saving spree, the world’s financial institutions deliver, commodity prices remain weak, government regulation intensifies and protectionism threatens, if not dominates. Sluggish economic growth and deflation are the likely results.