Does Markets Tops On Good News?
” Bubbles become so attractive that they eventually suck in the skeptics” – Harry Dent
A massive win for BJP in Uttar Pradesh, superb quarterly numbers, GDP rising, Inflation under control, Loan defaulters under scanner, hawkish stance on Black Money!! So much of goodness all around!! WOW!
Commodities and stocks have been on fire the past month and I think it just may be time for things to take a breather. While I continue to stay long, taking some money off the table to lock in profits is a safe play.
Just from a quick glance at the charts we can tell the odds are pointing to some type of pause or pullback in the coming days. I figure any day now we could see some profit taking.
GOLD – MCX
Gold have already repelled from 200 dma. Currently taking support at the 50% level of the whole swing up from 22nd December. The magnitude of the pullback will decide further fate of the yellow metal!
CRUDE OIL – MCX
Crude gave away its maximum gains i just 4 sessions. Closed below 200 sma! Momentum on the downside is picking up.
BANKNIFTY – WEEKLY
BankNifty is near the life time high resistance. Close above 20950 will be a bull’s signature in the index. But since we are at a very important infection point, cashing in on the long positions is very much justified.
NIFTY – WEEKLY
Last few weeks, Nifty registered sideways movements. Nifty managed to kill both sides very cunningly. With BJP’s massive win in Uttar Pradesh, Tuesday we are expected to open gap up and register 9000 levels. Important thing to mind here is we are running into a life time high resistance near 9191. A “solid” close above this level will be a booster for bulls to carry on bear slaying. Since we are near a very important juncture and good news is flowing from all the 10 direction, cashing in your positions is not at all a bad idea.
What does the general public hear and think about the stock market?
From recent emails, local financial news shows, family, friends etc… all I am hearing is how strong the market is. Indexes are about making new yearly highs and company earnings are better than expected this quarter. Sounds like all we need to do is buy and life will be great!
Well in my opinion the market is the perfect tool for misguiding and frustrating the general public. All my indicators are telling me we need more of a correction before rallying much higher. The market (smart money) generally anticipates good and bad news several weeks if not a month in advance. So the question is:
Are company earnings already priced into the market? Is all this positive market coverage getting the general public to buy up here at this possible market top?
The answer is, only time will tell. No one knows for sure what the market is going to do but short term moves can be predicted with relatively high accuracy.
Don’t get me wrong, I am still bullish on the market but with all this good news becoming public information you have to wonder what is next. I am still long the market but trimming my positions to lock in profits and still stay in the game.
Disclaimer: I currently own GOLD, CRUDE, NIFTY and BANKNIFTY .