Thursday, January 24, 2008

Rangebound Markets

Nifty is in an intermediate downtrend and a short term downtrend while the long term trend still remains up. A market or, for that matter, a stock is said to be in a downtrend when it is forming a pattern of lower highs and lower lows. An uptrend is resumed, according to the Dow Theory, only when the most recent low is above the previous low and the most recent high is higher than the last high. As seen in the 30-minutes chart of Nifty above, the most recent low is around 4690, after which a rally came about and made a high of 5350 before coming down again near 5000 levels. Now, 4690 and 5350 are the levels to watch. 4690 will provide support to the Nifty and 5350 will provide resistance. Also to watch are the next low and high to be formed. But we can safely assume that once 5350 on the upside is crossed, we will be back in a short term uptrend. To determine the end of the intermediate downtrend, some consolidation/base building between 4500 and 5500 will be required.

There were a lot of low-risk buying ideas given for investors yesterday. Stocks which give us a buy signal from a short to medium term perspective will keep finding a place on this site. Needless to say, such strategies will be low risk strategies unless specified otherwise. As of now, in this volatile atmosphere, there does not seem to be anything worth putting your money on. Keep checking out this space on a daily basis for more ideas.

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Happy Investing!!!