If at all we have to tread the path now after the last 2 days of trading where the Indices have closed below the critical 5660 levels I would just say stay away for the target levels of the 5522-5440 levels is the first words of caution that flashes to my mind.
However on the contrarian view point the markets have closed below the 5600 zone on the weekly basis which is good for the investors from the medium and short term pont of view. Since this class of people have missed out of the rally from the 5200 to the 5800 levels that was reached during the previous last month and they have been eagerly waiting sitting on cash to do some value buying.
And this dips would be the right arena for them to enter into some of the best stocks from the medium to the short term perspective since most of them are expected to remain volatile and enter into the profit booking and correction mode giving space for the long term investors and medium term traders to re-enter.
And now that the weekly closing below the 5630 levels has been confirmed the Indces are surely to test the 5540 levels which is a minor level and could head further down witnessing some freefall to the 5440 levels below that 5540 levels. If that happens then the markets and Indices will retrace nearly 61% of the rally from 5200-5800 or rather retrace the entire rally from the 5400-5800 levels casting doubts on the minds of the investors and technical analysts as well if the rally which changed the course and view of theirs to long term bullish was right or wrong.
This is the most critical question that is popping out among all now, since if the Indices dissolve like the early incidents which is below the 5500 levels that the rally was short term one and not the long term that we were looking for.
But as Indicted if the markets hold above the 5526 mark for this week and closes above the 5630 zone then all the speculation and doubts would be put to rest and we could look forward to further higher zones and if not a closure below the 5530 levels for today and tomorrow would clearly lead the Indices to the 5440 levels by the week …. and hence based on this it would be the wisest to trade……..
Inputs: Mr. Hemanth.V, Faculty TA, Stock Market Institute – Bangalore)