Stockology: Reduce holdings in stocks that fail to bounce from lows or show strength

Broadly with volatility by January 15, we should see 25750, and post January 15th there is a bright chance of Nifty breaking the recent low and making new 22700 before end of February cannot be ruled out.

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.

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Review of Last Week:
We were bullish on the markets last week, and as expected, the markets crossed 24,540, indicating that the bulls are tired but not injured or hurt and should not be taken lightly by bearish traders. The banking sector is showing signs of significant inflows and funds accumulating within the sector. The technology sector appears to be in a different avatar and could deliver a big surprise. Wellness is another sector generating significant interest. Recovery in PSU sector stocks was positive for participants, allowing many to recover from their losses.

Technical Analysis:
Nifty's weekly closing has confirmed that bulls remain active in the market and have not been ousted. The bounce is slow, but the breadth indicates a substantial number of bulls in the system. Closing above 24,400 demonstrates strength, and it is now technically confirmed that 25,675 is achievable before January 15, 2025. After that, the possibility of a correction cannot be ruled out. Volatility will present opportunities to invest below 24,000, which should be utilized. However, breaking 23,400 will indicate and confirm a new low, which we identify as 22,700. Markets are conducive to swing trading, and reducing holdings in stocks that fail to bounce from lows or show strength is advisable.

The markets are expected to remain volatile within a range of 25,700 to 22,500 over the next four months.

TimeMap:
Time and again, we have mentioned that just as prices are recorded on charts, behaviour patterns also get recorded and plotted with time. This gives us the TimeMap, which provides insights similar to how Google Maps informs about traffic. Human behaviour follows peculiar patterns that trigger market reactions. Broadly, with volatility, we expect Nifty to reach 25,750 by January 15, 2025. However, after January 15, there is a strong likelihood of Nifty breaking the recent low and reaching 22,700 by the end of February. January 15 is a notable celestial event, potentially causing global turmoil.

Apart from the two aspects mentioned below, there are no major events during the week:

Sun 180° Jupiter on December 8: This is very positive for the markets, especially banking sector stocks.

Mars 180° Venus on Friday, December 12: This aspect has a moderately positive impact on the media and cold storage warehouse sectors.

Action Plan:
Where possible, reduce exposure to stocks with weak bounces over the last 15 days. The second wave of selling could be nerve-wracking.

Monday, December 9, 2024: S.9: PurvaBhadrapada: Bad Day
A higher opening is expected. The 9th Tithi tends to show a bullish first half, consistently displaying a rising trend in the markets. Many nearby short-sell stops are likely to get triggered. However, the second half often sees markets giving up intraday gains, and a negative move cannot be ruled out. Use a buy-and-sell strategy in the first half, and switch to a sell-and-buy strategy in the second half. Overnight Sell Today, Buy Tomorrow (STBT) is recommended.

Tuesday, December 10, 2024: S.10: UttaraBhadrapada–13:30/Revati: Bad Day
A very challenging day for making profits. Many counters may experience panic selling, with some facing forced selling. The pharma sector is likely to come under pressure, and technology stocks may also face selling pressure. Many failure signals could be generated, triggering the unwinding of positions. However, hydropower and power companies are expected to perform well.

Wednesday, December 11, 2024: S.11: Revati–11:48/Ashwini–10:45: Good Day
The Tithi is auspicious but bearish. The Nakshatra could lead to extreme emotional behavior and wide volatility, potentially confusing traders. The technology sector is expected to face significant pressure, while FMCG is likely to attract investments from HNI investors and FIIs. Anxiety levels will be high; therefore, slow and cautious decision-making with delayed indicators is advised. Speculative positions with a 13–15 day view are highly recommended, along with Buy Today, Sell Tomorrow (BTST) trades.

Thursday, December 12, 2024: S.12: Ashwini–9:58/Bharani: Bullish Day
After three consecutive bearish days, this will be the first day for bulls to make a comeback. Select counters from the real estate and power sectors are expected to see significant jumps in volumes and price breakouts. Overall market sentiment is anticipated to be bullish, with a big move likely. Overnight trades using divergence indicators and a long-short market-neutral basket strategy would be ideal.

Friday, December 13, 2024: S.13: Bharani–Kruttika: Bearish Day
Tithi 13 is known for surprises, and the Nakshatra Kruttika often signals divergence or separation, suggesting trend reversals. The auto and oil & gas sectors are expected to yield negative results, while private banks may show positive moves, as observed in the past. While the day may close positively overall, selective sell trades are expected to generate significant profits.

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