Nifty has had a dream run since the last swing low of 16800 and at that level, a lot of technical analysts were predicting levels of 15000 and 14400 or so. But markets always have a mind of their own and most of the times tend to confound everyone. If one recalls the negativity and dark clouds at that time, there were no silver linings visible at that time and inspite of all that markets kept going up and we are again close to touching distance of previous all time high near 18890.
I think this goes to prove that its difficult to pinpoint or forecast markets too accurately in the short term. Rather it would be prudent (investors/traders following technical analysis) to wait for markets to do their stuff and once a trend is established, get on the train because the ride thereafter would be easier and faster and therefore more enjoyable. For the fundamental or long term investor these things do not apply as they should be overjoyed by sharp corrections.
Attaching a daily bar chart of nifty wherein there was a breakout from an inverted head and shoulders pattern on 27 April at levels of 17850 with potential target of 18900. We are close to those targets and at close to previous all time highs. Usually near or slightly above these key levels some amount of profit booking/consolidation is expected. Index may go sideways, or correct but stocks in strong momentum would find it easy to move up during these times. We have examples of such strong momentum stocks like HBL, Usha, Som distilleries ( some stocks which I own and track closely, there will be many more such strong stocks) having strong runs. We have to figure out ways to ride these kind of stocks as many of them end up having parabolic moves, often having short to medium term bubbles. If we ride these properly, a lot of wealth can be created. Best thing is to find out stocks with strong momentum with good fundamentals and good future prospects ( by scuttlebutt, management articulation through annual reports and concalls etc, feedback from sector peers etc. )
After a long time we are seeing strong momentum in small and midcap stocks and if we are into these segments of markets it makes sense to make the most of these opportunities. Many technical guys are now projecting levels of 19000 (not too far away) to 21000 in near to medium term. I usually try to know where my stocks are headed especially when there is good market strength and am not too focussed on short term sideways movements in markets.
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