Bottom Line: We are in last leg of the first
correction of our multi month Bull Run. We will not enter Bear trajectory until
Nifty breaches and close below 6580 for three consecutive days.
Good Morning!
What a start to the month of September. As expected Nifty has
started to move towards 7400. We are looking for a firm support at the level of
7460. The question remains, is this good enough to hold for the multi month
Bull Run on the larger time frame? With yesterday’s price action, the good news
for the bears is the intermediate trend has turned negative. This will add more
pressure for the last standing bulls (short term investors). Meanwhile, the
psychology parameter which was bullish till Monday have also turned and it
indicates a neutral view. If bears manage to close Nifty lower today, we could
see fear creeping into the markets.
Technically Speaking, the inherent strength (marked by RSI)
on all different time scales (daily, weekly and monthly) has more room to push
prices on the downside. Looking at the RSI indicator on the monthly chart, I
think the correction would end probably when RSI hits in between 45-50. I have
seen this many a times that the correction on larger time scale ends exactly
between these levels on RSI indicator. With expanding channels on the downside,
which indicates more downside on the cards.
In short, hold on to the cash and as soon as our correction
is over, we will have opportunities to enter into solid stocks which would
fetch better returns than Nifty.
The trends for the day.
Long term Trend: Correction to the ongoing Bull Run.
As long as we hold on to 6580 we will not turn negative on the long term view
of Bull that we hold.
Intermediate term Trend: The trend which was neutral till
day before yesterday has turned down (negative) with yesterday’s fall. However,
intermediate trend on Nifty will not hold for the day as it needs one more day
of negative close.
Short term Trend: Trending Down. The trend will not
change until we close above 8240, which means 8240 would act as SL for those
who are short in Nifty.
Safe Investing!
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