Test your patience....

For the last 15-20 days, markets had been testing our patience. Every rise builds new hopes for both bulls and bears....Bulls hopes of recovering loses while bears get ready to smash again. But interestingly, no one could take the upper hand, since markets remained very silent in a small range with increasing fear factor. The fear factor ie. VIX rose to 31+ now.

What to do at this point? Should one buy or wait. Again wait for what? A dip or see the rally pass by.....Well, I will present a few graphs to explain it....

1. SST (Saptarshi Swing Trade)

Well, my own mathematical indicator gave a BUY signal on EOD charts 1 trading day back. The buy was generated in Neutral Zone. So reliability factor is 50-50.

2. Weekly Stochastics Indicator

The weekly Stochastics has turned positive from below 20 and has generated a BUY signal on the weekly charts. Generally, this is a strong signal since a broader trend is taken into consideration. Plus the weekly charts held on to 34 ema levels and the daily charts 200 dma level which are pretty strong levels.

3. Possible Reverse Head & Shoulder in EOD

The above chart shows a possible formation of Reverse Head & Shoulder in EOD Charts marked by S-H-S'. Now S' is not yet complete, which means that we cannot yet confirm whether this pattern is a RHS or not. If Mondays market does not fall below 4757 but most preferably below Friday's low ie 4797 (1st month futures level); then we can probably say that the RHS has been complete and any rally above the neckline level of 4920 will generate a clear bullish signal and a strong BUY signal.

4. Mirror Pattern on EOD (My own theory still trying to find way)

The current phase in the charts is probably the reversal phase of it formed in Jan-Mar 2008. The points in consideration is marked in circles between the blue support line and red resistance line.

5. Probable Bearish Wedge Formation in EOD

The only worrying factor in the market is the above chart. The above charts shows a possible bearish wave formation in place with the 5th point moving towards 4550 and then the upmove to 5000. So, if markets fall below 4750, one must exit the market at least once and then wait for the next signal.

Given all the above, I am currently going to stay hold, with fresh buying only above 4920-30 zone, if the market holds there. Please note the VIX might show the continuing trend to move upwards. Current PCR is 0.91 which shows more calls are being traded than puts but 0.91 really do not suggest anything.

The budget is only 4 days to go. So there will be interests in specific industry and specific stocks.

So stay calm and focused. Happy trading !!!