Markets are choppy

We are witnessing lots of volatility and whipsaws. There are signs of exhaustion and some of the stocks are punished on the basis of quarterly results.

How do we trade in this market? Keep volume low and do not buy breakouts , wait for the signs of strength.

Let us take an example of Escorts. You can see on the adjoining chart that after breaking out of the range of 105-109 with good volume it touched a new high and corrected with five down days. It made a high of 118.50 today. How do we trade this stock. If tomorrow it is able to trade above 119 then only it will show us strength
Today it has taken support at 20 DMA and oscillator are at oversold level and any uptick will see it turning up.

Escorts may resume its uptrend only when it trades above 119 with support of 108 with possible target of 133-150.

Will we move to new high ???

Well, its almost have been a year . A year before we had the financial meltdown ,the Lehman Bros.collapse, and credit default swaps, and Gov't bail outs and  announcement of Stimulus package all acorss the globe by Government. Now everybody is talking that the worst is over. Are we really come out of woods ?? Just for your information Japanese Index Nikkie  made a high of 38900 in year 1990 and today its trading at 10300 . Real estate bubbled had an adverse impact on the economy. And do you know  that the Japanese introduced 11 different stimulus packages worth 30 Trillion yen? The Japanese thought that rescuing bank and  making concrete river bed will put economy on track but they were wrong . The country has a huge debt and people are saving more and consumer spending is not picking up.US ans all global markets surged up on the back of some encouraging economic data particularly about increase in consumer spending  but how long is it going to sustain ?? Unemployment is a  big concern and as people are unsure about future they tend to save more and do not spend .

 All this has been nicely highlighted by Bill Bonner of .www.dailyreckoning.com
You can read about it in detail  http://dailyreckoning.com/the-credit-cycle-has-turned/

One should just keep this simple things in mind as  media talks about Nifty going to 5500-5700.