Stockology is a weekly column by futurologist Mahesh Gowande. He is the Founder and Director of Ayan Analytics, which has developed ZodiacAnalyst, a research software with time and price charting tools.
Review
We had suggested that rising markets should be used to reduce leveraged exposure and book profits, and the current position is clearly favouring sellers. Simply keep booking big profits, and re-enter when the gains outweigh the risks. As of now, volatility has increased, and stock-specific action is keeping hopes alive. Many traders are holding on to their negative positions hoping their time will come. But if you are holding 10 negative positions, only three will give an exit, and the rest will block your capital for five to eight months.
Technical
A clear distribution pattern is developing on the charts. Price movement is sideways in a small range, and gradually rising. But in spite of much wealth creation between December 13, 2023, till Friday May 03, 2024, we are not seeing euphoric movement, and that is very unusual. We had mentioned previously that breaching 21,710 would trigger sales, and last Friday we saw a heavy negative tilt in the markets.
Friday's candle was totally bearish, below 22,305. We see short-term sell signals being generated on the charts at 22,049.
The time map is showing signs of wealth destruction in the coming few weeks.The current week is also looking negative on a weekly closing basis, and the fall could be big. Do not try to catch a falling knife, let the markets settle before re-entering. Every sector is showing signs of correction.
Solar week: the sun's movement from May 4th to 10th shows the direction for the next 35 days. From a trading perspective, this is one of the finest phases to aggressively pursue trends. Many over-valued stocks might see a steep correction of more than 15 percent. It's best to play long-short trend-following strategies, and keep adding to one's profitable positions. The week is dominated by the tithi and nakshatra positions, and there are no major planetary aspects.
May 6, 2024: Monday: K.13: Revati: bearish day.
A lower opening will be a bad signal for the markets. Tithi 13 will create panic in the markets due to external factors. When Nakshatra Revati is sensitive, traders tend to panic and quit positions without thinking about the same. Power and media stocks will hog the limelight.
May 7, 2024: Tuesday: K.14 11.41/Amavasya: Ashwini: pull-back day.
The sentiment in the market will be nervous and pessimistic. Participants will keep waiting for positive news. As per our time map, technology would be the best sector for swing trade plays. Contrarian strategies will pay off well, but it won't be easy. BTST (buy today, sell tomorrow) is indicated.
May 8, 2024: Wednesday: Amavasya: Bharani: volatile day.
A higher opening is expected, and while the markets will remain volatile with bouts of positive and negative moves, a slowly rising trend is expected till 14:10. The Nakshatra change will give the best STBT (sell today, buy tomorrow) trades — use divergence indicators for the best results. Reality and housing stocks would be positive, while banks and auto could be negative.
May 09, 2024: Thursday: S.2: Kruttika-11.55 / Rohini: fall and recovery.
Mean reversion indicators will give the best results. Natural resources, especially metals, will see nice intraday movement. Textiles and pharma will hog the limelight. New-age stocks (startups) will see a lot of investment from deep-pocketed investors. The hotel and travel industry will see a boost in demand, which will also help other local businesses. BTST is highly recommended.
May 10, 2024: Friday: S.3: Rohini-Mrugga: Bullish
Momentum indicators will give the best results. The Tithi is clearly bullish and the markets will see a lot of movement. The important thing is that the markets will close in the same direction as they open. The big players in the communications sector and private banks will hog the limelight, and the maximum profits can be made by using hourly strategies, especially those involving momentum breakout indicators.
The last day of the week will be the longest candle of the week.
Disclaimer: The views and investment tips expressed by investment experts on Moneycontrol.com are their own and not those of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.
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