Even though market technicals have been weak, I really expected much waited budget proposal would lift the market or at least it would create a short term momentum. But it did not happen. This was an honest surprise to me.
Most of you may wonder why the market is behaving like this?
Lets see some possible reasons;
1.Some institutions and some big investors continue unload their stake slowly but steadily on the market
2.There are no significant new traders/investors coming into the market
3.Significant amount of retail investors and traders unwillingly cash their stakes for liquidity reasons
All these or combinations of these are creating more supply than the stock demanded by institutes, investors and traders.
Now, lets look at our favorite weekly ASI graphs;
When stocks look cheap compared to previous high, people buy them guessing market has reach the bottom. Guessing the bottom is an expensive game. One alternative approach that I have been writing about is "scale up strategy". This is an intelligent way to keep your losses very low. I learnt this approach from Jesse Livermore. More I trade more I understand the value of this simple but powerful strategy. (read my previous articles on Livermore for his key trading rules)
Lets briefly look at foreign buy and sell. I am taking this graph from JBS securities site;
Lets look at Financial sector for a moment. Is it holding its place or giving up the gains? Let's see;
Financial sector has relatively been holding to most of its gains but it also broke the support line with heavy volumes.
With all things considered, market is under Red light. We got to be patient here till we see a silverline.
To your success,
Manoj Balasooriya
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