What could be next on market’s mind?

This market has baffled lots of people with its strength(One more time!). Looks like the whole world has been waiting for correction and markets are not giving any signs of correction! The move from 4000 to 5000 on NIFTY has been in a vertical line. Now everybody is calling for a correction because people want to buy stocks and many have “missed” the bus.

The “mean reversion” guys are shorting every rise and so far they have been unlucky and have been losing money consistently. Traders like me who believe in following the trend have had some big winners in RPL, REL and RelCap. All such traders are riding their profits and adding on to their winning positions.

So what could be the next move on NIFTY? I see two possible scenarios:

Scenario 1: The markets don’t correct sharply but individual stocks do. So the markets just consolidate while “sector rotation” happens.

Scenario 2: The markets go up sharply and then suddenly reverse one fine day without giving notice! This shall happen when strong hands dump the stock at higher levels when nobody expects a correction. This market can easily convert “non believers” into “believers” in a short span of time. All the guys who are riding on big profits shall fuel this rally and take it to dizzying heights. Imagine if this market goes to 5500 or 6000 in a jiffy- who would be talking of correction?Markets might continue to go up till this “missed out” crowd finally jumps in.

The only strategy during these times is to avoid “getting sucked into momentum stocks”. So do not buy something on market rumours and news. If you missed something, then just be patient and wait out this move. Avoid being part of the “crowd”.

Also it might be a good strategy to ride your profits because the stock which is giving you 20% till today can easily give you 50% in a short period of time. So one can be greedy but not without discipline.

Predicting next moves on the market might not yield anything. One can so easily go wrong.

5200, 5500 or 6000- all look possible.At the same time 4800, 4500 and 4000 also look possible.

So take all the ‘surprises’ in your stride and move on. Remember surprise is the only constant in this market. Your aim should be to make money despite all the surprises.