We have had a brutal correction in overall markets since past few days. By now it’s become all too familiar. Whenever these corrections come about, the kind of downward force that is there takes most market participants by surprise. This has happened in the past also and is the case in most corrections.
When these corrections come about is anybody’s guess, and personally I have found them difficult to predict on a consistent basis.
How to negotiate them is often the big question. What I usually do is evaluate my portfolio stocks, and try to weed out the least conviction stocks, both in terms of fundamentals and technicals and try to get into new better options, or increase allocations to existing high conviction bets.
If we take a broader view on overall markets, 18880-18890 was a major top previously. In this correction we have reached those very levels. So logically based on change of polarity principles, we could get support at those levels. Nifty is close to 200 dema at around 18840. So current levels need to be watched for arrest of fall in Nifty and a possible tradeable bounce. Otherwise things can get ugly.
HBL is also in a corrective mode, and has corrected to levels of around 260 from highs of 310. This seems in line with the market correction.
@rmjp Logarithmic scale is used on very long term chart of months and years. For short to medium term, its better to go for normal price charts. While reading William O Neil’s book, (or any other book for that matter) try to focus on the overall learnings rather than getting stuck with a single point. We have to remember that this book was written decades ago, so some things may not apply to today’s markets. But if we get the overall concept described in the book, which is that of getting into stocks with both earnings and price momentum, it should serve us well.