Om Sri Ganeshaya Namaha

Om  Sri  Ganeshaya  Namaha
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Sunday, April 15, 2012

Follow the broader picture

 Nifty Weekly Chart

Markets trend only 30 % of the time.Rest of the time it moves in a range which is either a consolidation or distribution phase.The Nifty has been in a range since the double top made at 6338 in November 2010 keeping market participants on tenterhooks whether it was the start of a downtrend or a consolidation.Follow the broader picture- is the solution.The Indian economy is a growth story and we need to keep this in our minds while investing.Would like to share this excerpt from an article I read sometime back.
Always be aware of the big picture. Investment market movements are a function of the global economic and political environment as well as the collection of moods and attitudes of investors. While investors are mercurial, the political and economic landscape tends to move in a more deliberate fashion. 
Peter Stamos, chairman and CEO of Sterling Stamos Capital Management, relayed the story about the headmaster on campus who walked his dog every evening. Every evening after dinner the headmaster would stroll along the quad, walking his dog who hurriedly scampered from lawn to lawn, bush to bush, occasionally stopping to greet a passer by. Each evening the headmaster walked an identical path in a slow and predictable fashion, yet predicting the path of his dog was impossible. That depended upon an incalculable number of decisions taking place in his trusted pet’s brain. Ultimately, the dog followed the headmaster. After all, he was on a leash. Peter’s point was that the economy is the headmaster and the market is the dog.
Over shorter periods, predicting the markets’ pathways is like reading the collective minds of investors, yet over longer periods, the market must follow the economy. Focus on the landscape and understand the economic headwinds and tailwinds as your guide to managing your asset allocation.

So at such times it is wise to take a longer term view of where the market is heading.So I chose the weekly charts to gauge the situation.The charts clearly show an ascending triangle which is a pattern having bullish implications.Even if the low of 4531 is violated the pattern could be valid so long as the Nifty registers a higher low as compared to the October 2008 low of 2252.Only a fall below the 50% fibonacci retracement level of around 3600 will ring alarm bells.

So what does one do? Pick good stocks at cheaper prices than when at the highs.Nishit ( of ) and I  have come out with Cherry Picks, Mid-cap Magic and The Gold Rush report to help you invest. You can subscribe by writing to us at

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Happy Trading !!
Lakshmi Ramachandran

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