Tech musings

Global markets have given a breakout and it seems that they will move higher in march. If we look at the given S&P500 chart it seems that S&P500 is going to trade at around 1580 – 1590 levels. This may be the last leg of the rally which started in 2009. (This must be atleast 4^th or 5^th time I think so, rest of the time S&P hit my stop loss and moved higher)

I think that we will see some major top in global markets in March and hence March must be euphoric atleast during the first two weeks.

Second chart is that of Nifty. We can see that Nifty found support exactly at the long term trend line and moved higher.  Unless Nifty breaks this trend line deeper correction can be ruled out.

In the third chart I have zoomed on to the current candle and we can see current candle of March looks to be very bullish.

If we look at retracement in the fourth chart we can see that target for current rally will be around 5900 – 5950 and at max around 6000.

Overall markets look tired and exhausted. If we look at individual chart of Nifty 50 stocks there would be barely 10- 15 stocks which have made new all time highs and have pulled the market up. Rests of the stocks are still trading near their lows of 2011. Secondly Nifty is also trading up due to constant change in index.  Stocks like Asian paints have replaced cyclical stocks and thus helped to move index to all time highs, but there has been no broad based rally in markets. 

In absence of any broad based rally, I think the current upmove which stated in January 2012 and ended somewhere in January 2013 is a pullback rally in a bear market. Also readers may remember in my previous post on 26^th October 2012  I wrote “Similarly, we can see that markets are facing resistance at 20,500 levels and from last six years markets have not been able to close above this level. I think it is highly unlikely that in the current year markets will close above this level. Therefore any upside from here will be limited in nature.”

If we look at the given chart we can see that sensex made a high of 20203 and turned back from there. My gut feeling is that it will be atleast one more year at minimum i.e. 2014 or 3 years i.e 2016 before we see the break of new uptrend in Indian stocks.

Summary:-
1. Traders can go long on market with a stop of 5600 and target of 5900 on Nifty
2. Investors should stay away from market unless nifty gives a weekly closing above 6250
3. March may see euphoric rallies (atleast during the first half) but market may top out in this month. We will have to wait for confirmation on charts.