Actually, this is good news. After many days of almost free for all movements, classical chart resistance seems to work. This should also mean that chart support levels will also be respected.
For weeks altogether, the market has moved almost like a drunken elephant, without any clear direction. Finally, the market is adjusting to the new reality of lower prices, cooling down, and, accepting the 'normal' support and resistance levels.
There is strong resistance in the 3200 area. Today, the resistance held, with the Nifty closing below 3000, losing almost 250 points from its intra day high. This is a lot, almost 8%.
Too much Volatility
The market continues to exihibit far too much volatility preventing any kind of low risk trading.
Increased volatility is not a sign of base building which is essential for a bull market to start. My point is: the first signs of a new bull market will emerge when volatility falls. This has not happened yet.
The index, closing below 3000, is not a catastrophic event. The Market has moved 50% from its lows of 2252, in just 8 days. This could not be sustained. Today's decline should be taken as a correction. I assume that the intermediate trend remains intact, although volatile markets can do anything, anytime.
Support for the Nifty will come in a range between 2700 - 2800. If this support does not hold, then we have to step aside, let the market decide where it wants to go. If the support holds, then this should be a dip, which is a buying opportunity.
Why this column is still looking for buying ?
Because there are no signs that the up move is over. Today's decline is considered a correction. As usual, the markets decide, and, we can go wrong.
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► 2011 (200)
- ► November (9)
► October (28)
- Answers to comments oct31-11
- Process of Consolidation Likely
- Nifty Pattern Targets Reached
- Happy Diwali
- Stock Selection (based upon their historical volat...
- M&M Consolidation
- Niftnear ORB Trade
- A dip in an ongoing up trend
- TATA Motors Life Cycle
- Hindalco touches support
- Mystery of the missing trailing stop
- Nifty Live Oct 12-11
- Point and Figure Charts
- Aiming for a better trade
- Long term view of Nifty
- Zen stories for Traders
- Hero Motor Corp at its support level
- NR 7 in Nifty Weekly Chart
- trading with a gap open
- Silver Pushes against Resistance
- An unusual continuation pattern in the Nifty
- Sudden Rally
- Nifty at 4750
- There is a time to be old and a time to be bold
- Afternoon review
- Nifty - Long Term View
- Higher High - Higher Low pattern in CNX IT
- Bear market shows its strength
► September (53)
- The Bear Story
- Nifty in a well defined range
- Morning View Sept 29
- Nifty Options Trade
- Nifty on way to close higher for this F&O settleme...
- Learning Ideas
- Short term trend is up
- Something Better
- A tale of two trades
- Before the Open - Sept 26-11
- Reliance - something better
- Nifty - A long term view
- Adding value to your analysis
- ► 2010 (263)
- ► 2009 (293)
▼ 2008 (219)
▼ November (26)
- Weekend Reading, Nov 30.
- Rally, maybe
- This time it may be different
- Market will tell us when it is bottoming out
- Hard Work is the easiest way to success
- New Posts
- This Bear Market may last longer than we imagine
- Is there a rally ?
- Traders enjoy the process of trading
- Bear Market continues, Nifty, Sensex may go below ...
- Choppy Market with down bias
- What should Investors do now ?
- Nifty returns for a 'Test' of earlier lows
- The trend remains down
- A Matter of Trust
- Udayan in Amritsar
- Early Morning Review - Friday 14 Nov
- It is not about earnings downgrades
- Abrupt End to Uptrend
- Has the Bull Market Started ?
- The 2 PM Review
- So much volatility, Market resembles a Casino
- The Market Corrects its up trend
- Smart Rally, but careful as Nifty comes near resis...
- Quite times coming ?
- Surpirse Rate Cut may not add strength to markets
- ▼ November (26)