Today's price action was inline with what was expected but we need to see whether this expectation extends further. Personally I feel we are heading much much lower. This is not because I am completely in Cash and have huge shorts piled up, but it is prior to me taking positions that I had the view of markets going into a near term corrective cycle. Infact, it is only today between 9.20 & 1030 that we squared off our complete portfolio's. We were building shorts since Monday and we opened up some big short positions today morning. I am willing to take the risk of missing out on any upside action (on squared off stocks) because I will reverse my position in Nifty (to my Cash value or more) in order to capitalize for the upmove. This is of course if markets begin a mark up phase from here.
What we were witnessing on screens today was not good. There was some serious unwinding of positions which was taking place. This is never a good sign. Moreover, along with Banking, leading sectors like Autos were coming off sharply. When two of the strongest sectors come down, it is difficult for the markets to sustain any upward bias/trend. Important support currently for the market is pegged at 5400 (inner channel; See the graph in previous post) and 5500 - 5520 (outward channel). But If I have to guess market's movement, I would definitely peg my money on markets breaching this level. In the near term, I would anticipate markets moving down to 5150 levels from where they are today. The journey down could be slower and lower.
On the whole, above mentioned things are just a product of my visualization of the market. I may be completely wrong. Just an opinion. Educative for some and Entertaining for others. Take your call accordingly.
Tc