Where's the Weakness?
Let's first take a look at the sector that looked like it was going to take off instantly.
Nifty Auto broke out of its continuation pattern and looked like it was ready to go! In the week gone by, we saw the price halt close to its resistance of 12,130. While that is only the first level, the target of the symmetrical triangle pattern comes to about 12,630.
What we're seeing right now is just the digestion of gains. And that, at quite a logical level, if you ask me. Topping out in December 2017, the price is now back to that level after four years. There ought to be some acknowledgement of the earlier peak.
We're keeping track of this to see if the price manages to move past 12,130. That's the signal we're waiting for!
Click on the chart to zoom in.
Take a look at this relative chart of Nifty FMCG relative to Nifty 100. Certainly doesn't send out a positive message of investment. The ratio is trading at 9-year lows. 9-year lows.
Earlier we saw some strength come through in this ratio as well, but it could barely hold on to that strength. Going by this relative chart, it makes it clear that FMCG as a sector is definitely struggling in the current market scenario and that other sectors would act as better sources of investment.
Similarly, look at Nifty Consumption finding resistance at the most logical level. 7,685 was the level we were tracking and that's exactly where the sector rolled over. So no surprises there when you take these levels into account.
On a relative basis too. Nifty Consumption is trading at 6-year lows. While the same level had been tested three times in this year itself, the ratio couldn't hold on to that anymore and collapsed lower.
Nifty Infrastructure too found a boulder close to the resistance level of 5,430. We'd like to see a move above this level to be bullish and get this sector on our list of positives.
Notice how close to every resistance, the price had halted for a bit, found strength and then broke out. We could expect the same pattern here too.
Here's Nifty PSE turning away from its resistance at 4,445. All these are logical levels for the prices to halt at. So the next order of business is to wait for a confirmed breakout above the level of 4,445 to initiate a bullish stance on Nifty PSE.
These are the areas of weaknesses in the market right now. Until these charts select their direction of resolution, there's not much to be done, and definitely better places to remain invested.
So this is where is the weakness lies. But where is the strength? Look out for our next post!
Thanks for reading and please let us know if you have any questions.
Allstarcharts Team