All Signs Point To An Impending Retracement - Long Positions Risky

The brakes were somewhat felt last week, with the NIFTY bucking the recent trend of astronomical breakouts and rising just 70 odd points intra week.

The short-bodied candle signals indecision amongst market participation at these levels. The fact that prices have raced ahead of fundamentals is a given. Even the most optimistic of bulls will have a hard time finding the courage to buy en masse at current levels!

The NIFTY has entered overbought territory on the weekly, monthly and daily charts at current levels. On the Monthly chart, the index is approaching the upper BB channel.

The next big move will likely be a retracement of 500 points in the NIFTY. If 12,400 breaks decisively, we could see the index trending lower, to around 11,900 as well.

Equity Mutual Fund investors would be making a smart move by shifting 50%-60% of their portfolios to debt funds at current levels.

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