Hope you all are having a great weekend. Here's a market update for the coming week with some content that I have come across and which maybe be helpful.
So what have we learned this week? U.S. markets continue to be the most gap-driven markets ever. Unemployment rates keep rising in India around 11.58% as of 28th May. VIX continues to crush towards its 47-week low. Meanwhile Nifty and Banknifty continue to expand quite higher. Markets have been a little volatile so cutting down on positions was the only way to trade through the week.
Consider Banknifty lagging behind Nifty I certainly guess catchup in trend might be possible. Covid cases have declined although came across news indicating that state governments have insisted on a curfew with state regulations continuing through June as well.
Banknifty seems to be extremely bullish on the monthly chart. I guess seeing higher levels on a medium to longer time frame is very much possible. I personally have an alternative view for the short term.
I think the structure highlighted above seems to be falling in place. I'm not calling for a correction here but just to point out that maybe we could be topping out in the near term. My idle stance would be to stay low on position sizing and keep following the trend.
Likewise, Nifty has been stronger in the long and medium time frame. Such a clean breakout from the channel. Higher levels are surely something we need to look into. Many calling out on a bubble, staying with the trend, and keeping a decent stop-loss shouldn't be that difficult here. Rember that you don't want to go short at every interval and be disappointed about getting stopped out and missing out on the larger trend.
Breaking Nifty into a shorter time frame. For as narrow it can get I guess one must keep a watch here of what's happening and keep following the trend as long these patterns don't really break or indicate a change for the near short-term trend.
NiftyPSU forming quite an interesting pattern here. 200MA is likely to test as resistance in the coming few days. The breakout from the historically tested channel can also be something to look into. I certainly believe we could be starting with quite a big trend in near future.
Coming to another key chart the S&P500. Markets continue to be engaged in a very subtle battle for control.
What happened last week? Markets again bottomed and engaged in another furious multiple gap-driven rallies coinciding with the Fed expanding its balance sheet. When will we know if these structures apply? Once there is a confirmed rejection below last week’s lows for the trend break would be validated then. The target if it were to come to fruition? Frankly lots of possibilities. From a basic weekly 5 EMA reconnect, to a daily 100MA-200MA reconnect.
Looking at how overextended the MACD looks sometimes I wonder if such "linear trends" last? and for how long they can be held at such highs.
Anyways, that's all for the market update. Hope this was helpful. Stay safe and trade well.