Nifty testing 200 DMA

Nifty is very close to its 200 Day Moving Average aqround 4964 levels. A close below the 200 DMA for 2 or more days is a bearish sign. Let us see how the scenario unfolds.

If the bear market unfolds in India, expect to see days like last week where Dow crashed 10% intraday and CAC closed 6.4% lower in a single day.

Nifty rangebound...sharp move expected

Nifty has been rangebound for few weeks now...traders have been getting stopped on both sides....Generally such a convergence/consolidation is followed by a sharp breakout or breakdown...who is going to take control this time bulls or bears? Probability favours the bears...

Return of the bears!

Todays breakdown from the trading range of the last 2 weeks has important ramifications:

1) Nifty has broken below 34 day EMA. If this hold this could be bearish
2) Nifty had formed a head-and-shoulder pattern and it has broken down. The target could be 3600 levels
3) If we break the low of 26 may - 4090 then this could further reinforce the bear market. The gap that was created by the gap-up on 18 May looms ahead.
4) There is a global sell-off happening

Elliot wave enthusiasts are talking of wave 3 of 3 which is the most brutal.

This could prove to be the end of one hell of a bear market rally. We seem to be back in bear-land. Be prepared to make money by shorting!

Two sides, two opinions - we'll make profits both ways

Stock market Bulls are thumping their chests, convinced we’ve reached a turning point for the economy.

With interest rates low, … bailouts, stimulus packages , recovery is almost here. And since the market always moves up ahead the economy, the time to buy is now.

But the Bears are equally convinced that we haven’t seen the worst — for the economy or the market — just quite yet.
They point to soaring job losses, corporate profits falling like a rock and sour consumer confidence as proof that now is not the time to buy.

Frankly, I don’t know which side is right, and I don’t care.

The diversity of opinions — coupled with all the uncertainty about the economy — virtually guarantees continued volatility in the stock market.

And I will trade the volatility on both sides of the market to make myself — and members of my services — a whole lot richer.

Trend-following vs Trend-prediction

Most of us like to be leaders...predict tops and bottoms....put on any business channel and everyone is trying to predict the market bottom ...attempting to beat the market. What we fail to realise is that the Market is all-knowing, all-supreme. It reflects the views of all the participants - bulls, bears, fundamentalists, technicians, fund managers, brokers, operators, TV experts, insiders, Investment Bankers, Fed, PM, FM, CEOs, uncle who is a stock market expert and also your milkman. So for once try and be a trend follower rather than a trend predictor. Observe what the market is saying. Trade with the trend. Make the market your friend and not your opponent. Am 100% sure you will be pleasantly surprised with the results.