Dear Investor,
Well, I do not really have to tell this. You all know it since you watch the market very well. After last weeks trend line break we saw three distribution days where people did some selling. I do not think those were really panic selling days. Volume of selling was really weak. We have now entered a range on 6000 - 6200. If market manages to break this small downtrend then we will see break above 6200. Its consolidating in this range. Volume is not supporting the downside yet. But I see serious deterioration on individual charts. Basically profit booking is happening in full swing.
Bull market corrections do happen. Just it happens after retail investors jump in. That is why, I always suggest the idea of investing in small chunks and adding more when the market proves you right. If you have to invest Rs 10000 then only buy Rs 1000 worth stock and see if it actually holds the value for few days at least. Usually when the retail investor jumps in that is a very end of the rally. somehow, that has been track record. Then they sell in panic towards the end of sell off and then watch the market go up again. Usually they are out of money to buy near the bottom of rally.
I am not suggesting go all out and buy put options or short the market. Its hard to decide that just now. This market has lot of buying power. We have seen that in past 4 dips. There is lot of support. What you will find it that the stocks you bought are not holding. Its not just you. Its all of us.
When playing with fire like the full on bull run, expect the burning to be part of it. Any close below 5950 is a strong indicator that correction has arrived and will continue for few weeks at least. There is too much demand for stocks so I am not sure of breaking that level.
As I told you last two weeks were interesting to watch because earning season just kicked off. Now we will know in coming week if it was a bull trap or a real bull.
Thanks
Anil
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