Few thoughts on the market
Markets this week:
Although stocks had a bumpy ride this week yet trend was quite strong in Nifty. Seems current impulse has more legs and we are heading for 10930, my extended target. Its highly likely that we ll achieve this target in the next trading session.
As we are heading higher there is delight as well as confusion in the markets. There are a few important questions which I would like to take up here.
First of all the million dollar question: will the market reverse from here ? or When it is going to reverse ?
There is an easy answer and a difficult answer to it. Easy answer is: "nobody knows" , the difficult answer is: "everybody will know when it reverses" . Still confused ? :) We should be happy as long as and as far as this market is bullish b'coz that is what most of us want. Just do not short until there is clear signal or an established downtrend. Timing the market predicting tops and bottoms could burn fingers most of the time but having few good trades in an established trend makes our week or month. We can never ride a full bull or bear run but we can ride the most juicy 60% part of it. Although the first and the last 20% part may be the most volatile, fruitful and tempting yet it could be choppy and may lead to drawdown on your trades.
So be patient and stay with the trend. However, one may reduce position sizes if one wants to.
What about the inverse relation shown by Mid/Small caps and the index this week?
We saw profit booking in this segment. I think they might soon catch up as and if the index runs higher. Just be stock specific, watch for proper levels and enter with limited and calculated risk. Do not forget to use stops and take partial profits whenever possible.
Is it the time to invest?
I don't think so. Although I see many recommendations on TV yet I won't invest at this point of time. There will be a time when nobody gives buy recommendations and everybody advice to stay out of the markets..dear fellows that would be the time to invest. We might not get the panic levels in the next one decade or so as we did in 2008 but we will surely see the same sentiment many times during this period.
I think this is the time to trade the market. Just hit and run. Take quick gains and load your basket only if you can carry its weight.
Hope you will enjoy the weekend to start afresh next session.
Trade Safe and dun forget to hit like/comment.
Bravo
