NIFTY & Sector Weekly round up
Weekly trend of the NIFTY chart is non-trending, price is coiling between averages. Lets look at the strength of NIFTY on the weekly chart using the strength of its component stocks.
Trending Long 17 stocks or 34%
Trending Short 9 stocks or 18%
Non-trending 24 stocks or 48%
It is interesting to note that close to half of the representative stocks from the NIFTY component list is non-trending, adding weakness to the index on the bullish side is that none of the 17 stocks which are trending long are strong. All the stocks in the long trend have a clear bearish divergence and are having a flat movement at the higher levels. The 18% stocks that are trending are stronger than the long trending stocks, but the number is less to give any direction to the index.
This is the reason that we are having indecisive moves on the index. This is a rare occurrence which comes once both the bulls and bears have enough for their share. Both have had enough food and are now resting, it needs to drain out unwanted energy and that will take time. WE are going to witness a prolonged bear more on the index on the weekly time frame.
We have had similar patterns in the beginning of 2008. But, then it was a shift from the bulls to bears. Bulls were full stomach and bears were starving without any bearishness in the market. Now the situation is different, both are full stomach. Similar moves have occurred in the 2000-2004 periods of the index chart. This is a great revelation, we suspect that his non-trending move is to prolong for few years. Global scenarios too vouch strongly in favor of this thought.
When longer time frames do not have trends, we can make good winning trades only on the lower time frames and even there the ratio would be fairly balanced with both winning and losing trades almost being the same. So, the days of high profile gains from the stock markets is over at least for the time being. This does not mean that the markets are going to die. Never is it going to happen, there will be a radical shift of sectors. Underperformers may emerge are leaders.
One more issue here is that out of the 10 broad sectors into which any economy is divided into, only TELECOM is underperforming now. It means when the equilibrium changes direction we will have only one or at the most 2 sectors (UTILITIES which are flat now along with energy may turn up, both these sectors are reeling under non-renewable resources & lack of new discoveries) may change to be out performers. While most of the other sectors will turn down. Only 2 or 3 sectors going up with some turning sideways , the major tilt will be on the bearish side.
Global economies, the major ones like the US and UK are in the brink of default, though they may brace up by printing more currency, because of their clout in the global financial arena, the damage they are likely to face is going to send the financial world into dismay. Small players in the markets, please beware. Do not get lured by the gains which the markets showed in the current decade to continue at least for the coming decade.