NIFTY & S&P 500 HOW TO TRADE ON A SLIPPERY ROAD

Market Conditions have dramatically deteriorated in last few days globally with emerging markets in total turmoil. Let’s have a look at S&P500 and Nifty.

S&P500 – Now at 100 day Support

2013 was a great year for S&P500. It did well to hold 100 dma and every decline turned out excellent buying opportunity. In 2014 – now S&P500 has once again pulled back to 100 dma but this time the way sell off has happened: there is apprehension whether this level will hold or not. There are concerns that Global economy is not holding well and S&P500 can see a deeper pullback.Here is my post explaining that explains various scenario
http://trendzofmarket.blogspot.in/2014/01/after-brutal-friday-correction-where-is.html.
 Right now: it would be better to wait and watch for little clarity. Any trade at this juncture should be taken with tight stop losses. My gut feel: we will hang around above 100 dma for few days before dramatically selling off.

Nifty: Can it hold up Nov lows?

Nifty has been totally trendless. The only issue before traders: Can Nifty breakout above 6380-6400. Below it: Nifty does not offer any trading direction. The real excitement has been in midcaps. But we all know by past experience that for midcap to perform – Nifty needs to be stable. At this point of time: one can draw that comfort boundary at 5972: the level it has held since November 2012. But trust me – If Nifty breaks 5972 on Global panic – there will be total chaos in broader market and hence one should be little careful.

Here’s my take
Right now I have no idea which way market is going to move. This may turn out to be excellent support or this may be the start of something vicious on the downside. We all can make a guess. But in trading, it is better to follow this rule: “When in doubt, stay out”. Just watch the market action for few days and then one can take a call on what one should do.