The Sensex signalled a bullish trend right from opening on Monday. It opened with a gap at 3135 in contrast to the closing of 3084. It moved up to a high of 3170 and closed high at 3167. The day's low was at 3133. The stochastic indicator has gone into the overbought in the daily chart. However, in the weekly chart, there is scope for the index to move up much higher before it becomes overbought. Currently, the indicator stands at 44.10 with the triggerline at 38.91.The index could come up with a mild resistance at 3120, but otherwise it has the potential to reach up to 3400. At that level, it could come up with some resistance, which would have to be respected. Technically, most of the scrips are now climbing over the immediate previous top. Even the Sensex went above the previous high of 3145. So in reality we are at a sensitive point. While on the onehand, breaking through the top barrier is welcome, yet during the day's trading it did pose a certain amount of risk. For at such sensitive points theprices could also react. But that did not happen. We are in the process of seeing the resistance being overcome.
To be comfortable, one would like to see one more day of where the resistance holds. On the other hand, looking at the briskness of the market rise today as well as the opening with an upgap in the Sensex, it is fair to take an investment stance. This is because the market looks set to reach the level of 3400.
The long term investors have an easy job. They can go ahead and invest. The short term investors should be prepared to cover themselves quickly, should the expected climb over the resistance falters.
But considering that the index has been steadily climbing up for quite some time now, the opportunities for rewards appears to justify the risk.
Copyright © 1998 Indian Express Newspapers (Bombay) Ltd.
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