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India Outlook Update

BrandonWendell
Brandon Wendell
Instructor, CMT

At the beginning of January, I wrote an article where I examined the current trends in the India markets and discussed the potential future movements for 2012. I have received several emails from people stating how wrong my analysis was on the equity markets and that I missed out on an excellent bullish opportunity.

I want to acknowledge that I did not miss out on that opportunity entirely. Many of those who emailed me were either not students or were not active in the Extended Learning Track (XLT) program or the Pro Picks. For those who were in my class in Mumbai, Pune, and Hyderabad or in the XLT, they saw the change in my market opinion from bearish to bullish as early as January 10th.

trading the Indian markets

I also want to credit Rajiv Chabra, one of our excellent instructors and a leader in the India XLT program, who was bullish from the start of the move. Students who followed him in the XLT sessions were able to enjoy much of the upward price movement we have enjoyed this year.

There is no doubt that we are currently in a bullish run in the markets. I am writing this article on Tuesday, February 21, so that it can be submitted before the printing deadline. Looking at the broad market, I had to change to a bullish opinion for several reasons:

  1. The higher lows followed by higher highs on the Nifty daily chart
  2. The Nifty daily close above the bearish trend line
  3. The Nifty weekly close above the bearish trend line
  4. The weekly close above the 80 week SMA
real time trading example

Although I am now bullish, I think the markets are a bit overextended and should pull back to retest the broken downtrend line before they can move higher. In the past few trading sessions, there have been small daily candles created which signal weakness. Much of this was due to the uncertainty in Greece. On the day that the second bailout of Greece was approved, the Nifty was bullish, but the European exchanges responded with a weak move down. This does not strengthen investor confidence.

Gold really hasn’t done much as an investment since my article. The demand zone was tested again in December and gold is currently listing along sideways and forming a bearish wedge. We will have to wait and see which direction it breaks.

Is now a good time to buy gold?

While silver did break a symmetrical triangle I spoke of, and did retest it as supply, there was not a large breakdown. Instead silver reversed and is now in a long consolidation for the past month. Usually these consolidations tend to break and continue the prior trend which would send silver slightly higher to the next supply zone.

Lear to trade like a professional

The lesson here is to have an opinion on the markets when you trade, but be flexible to see the warning signs for market changes. Join us in the Extended Learning Track (XLT) to have direct and constant access to instructors who can guide you through the markets and point you in the right direction.

– Brandon Wendell bwendell@tradingacademy.com

Disclaimer
This newsletter is written for educational purposes only. By no means do any of its contents recommend, advocate or urge the buying, selling or holding of any financial instrument whatsoever. Trading and Investing involves high levels of risk. The author expresses personal opinions and will not assume any responsibility whatsoever for the actions of the reader. The author may or may not have positions in Financial Instruments discussed in this newsletter. Future results can be dramatically different from the opinions expressed herein. Past performance does not guarantee future results. Reprints allowed for private reading only, for all else, please obtain permission.