09 Aug 2024 — Nifty down 334pts, makes a 61.8%
Nifty Stance Bearish ⬇️
Last week we shifted the stance to neutral, but monday’s price action was more than enough to go bearish. Japan’s markets fell almost 13% on the 5th of August due to news about carry trades. I have written an article on what is a carry trade and you can read it here:
I just drew a Fibonacci retracement tool between the close of 2nd August and the lowest point of 5th August. The important levels are:-
- 38.2% retracement at 24198
- 61.8% retracement at 24389
The good thing for the bulls is that the rout ended on 5th itself, and we did not make a lower low again. Today’s price action almost convinced us that the 24389 levels may be violated on the upside. But unfortunately, we are still below the 61.8% retracement and hence we are holding on to our short stance.
The US markets i.e. SPX look like this. 61.8% retracement is at 5320 and currently, we are 29pts above that. In fact, yesterday’s close is right at the 61.8 level and today’s price action would decide if we are long, short, or neutral.
The global markets are almost getting impatient with the current bull run now, just imagine when we fell 3.2%+ on that 1 day, the sentiment quickly changed to a panic like mode. Imagine the plight when we fall 25 to 30%. The new generation of investors have not seen a bear market and when it comes, they won’t be around to tell the story!
BankNifty Stance Bearish ⬇️
Unlike Nifty, BankNifty made a new low on the 6th of August after falling almost 1620pts ~ 3.16% on the 5th. Even though we shifted the stance to bearish — the current fall has no real momentum for continued action.
The OTM options did not inflate enough signalling that -3% of a day will be shortlived. The price action on the 6th did not create fresh shorts that would have driven the markets to further low. Instead, it created a low of 70pts just for the name’s sake.
The Fib levels show we are at the 50% retracement level. The other important levels are:
- 38.2% level at 50300
- 61.8% level at 50698
Next week we have the market holiday on the 15th so both BN and N50 will have their expiry on the 14th Aug. We hope to get some real directional movement in a week or two as the geo-political tensions in the Middle East are rising.
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