Nasdaq composite which is highly followed in the U.S. as an indicator of the performance of stocks of technology companies is heading toward its ever toughest resistance of 4500 which is still 200 points away from its current level of 4300.
When Nasdaq was trading around 2900+ we gave away upside target of upto 3600 and above that gave away upside target of upto 3966 to 4500 where it made high of 4311 so far.
I believe the time has come to book or get out of IT stock as Nasdaq headed higher towards 4500 and its better to remain in cash. Whether 4500 will be hit or not I don't know...its the maximum which i see as of now.
Why??? I am explaining with my logic@
When Nasdaq was trading around 2900+ we gave away upside target of upto 3600 and above that gave away upside target of upto 3966 to 4500 where it made high of 4311 so far.
I believe the time has come to book or get out of IT stock as Nasdaq headed higher towards 4500 and its better to remain in cash. Whether 4500 will be hit or not I don't know...its the maximum which i see as of now.
Why??? I am explaining with my logic@
Since Nasdaq was around 2950-3000+ various of the Indian IT stocks including Infosys, TCS or HCL Tech were available at dirt cheap price.... 2200(Infy) now 3750, 1180(Tcs) now 2200, 480 (HCL Tech) now 1550...etc.,
We still follow US market movement at its best. As am expecting Nasdaq to face tough resistance close to 4500 and see a big technical correction somewhere from there which will hit IT stock hard. The returns have been splendid and keeping the greed out its better to book profit and keep big cash aside.
My 2nd Logic@
Rupee depreciation has helped IT companies earn big revenues and profits. If NDA comes to power which looks certain as of now then the fate of INR is going to change where I see Rupee regaining the lost strength and getting back to 50 odd levels which is no good news for IT cos. So discounting all these assumption I feel its better to stay away from IT stocks and in both the logic its a no win situation for IT cos.
Nasdaq faces tough resistance around 4500-4572 which is still 6-7% away from current level...this's the area where it will get very vulnerable and stock prices could behave madly on the upside as well on the downside. See if your heart is strong enough to face that situation and if not then stay away.
Closing above 4600 on continuous basis could make it strong again where we can see fresh rally in IT stock or vice versa where Nasdaq can try to hit level of upto 5000-5100.
So trade or invest accordingly.
Note: Above are my personal opinion and I might get wrong.
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We still follow US market movement at its best. As am expecting Nasdaq to face tough resistance close to 4500 and see a big technical correction somewhere from there which will hit IT stock hard. The returns have been splendid and keeping the greed out its better to book profit and keep big cash aside.
My 2nd Logic@
Rupee depreciation has helped IT companies earn big revenues and profits. If NDA comes to power which looks certain as of now then the fate of INR is going to change where I see Rupee regaining the lost strength and getting back to 50 odd levels which is no good news for IT cos. So discounting all these assumption I feel its better to stay away from IT stocks and in both the logic its a no win situation for IT cos.
Nasdaq faces tough resistance around 4500-4572 which is still 6-7% away from current level...this's the area where it will get very vulnerable and stock prices could behave madly on the upside as well on the downside. See if your heart is strong enough to face that situation and if not then stay away.
Closing above 4600 on continuous basis could make it strong again where we can see fresh rally in IT stock or vice versa where Nasdaq can try to hit level of upto 5000-5100.
So trade or invest accordingly.
Note: Above are my personal opinion and I might get wrong.
Subscribe to my services...mail me at manish843@gmail.com
Further upside is not ruled out but am not expecting any such big return out of it and it also become a risky trade and where Nasdaq getting closer to 4500 will act as tough resistance and might correct. So if Nasdaq corrects then there is whole possible chances of IT stocks correcting here as well.
ReplyDeleteThis is what I feel.
Nasdaq faces tough resistance around 4500-4572 which is still 6-7% away from current level...this's the area where it will get very vulnerable and stock prices could behave madly on the upside as well on the downside. See if your heart is strong enough to face that situation and if not then stay away.
ReplyDeleteClosing above 4600 on continuous basis could make it strong again where we can see fresh rally in IT stock or vice versa.
So trade or invest accordingly.
Good Analysis. Thanks for giving this information.
ReplyDeletePlease update again, when we can buy IT stocks again.
Also, any other sector which will move along with the prospects of Nasdaq?
The idea is that with the upmove in Nasdaq composite the IT stocks will also move up but close to 4500-4572 in Nasdaq its gets into such a position where the stock movement will be very much unpredictable on the either side. Type of Roller Coaster.
ReplyDeleteSo safety is the key word.
Infosys corrected to 3343 as of now...down almost Rs 450 since this message was posted. As of today strong support close to 3290 for Infosys.
ReplyDeleteInfosys corrected to 3200. Corrected close to Rs 800. See another 8% decline, close to 3000 to 2900 where some buying interest can be seen.
ReplyDeleteInfosys@ hits 3000 as expected.
ReplyDeleteOn 30th May 2014 it made intraday low of 2880 and closed above 2900. Where on 10th April 2014 we said that@ Infosys corrected to 3200. Corrected close to Rs 800. See another 8% decline, close to 3000 to 2900 where some buying interest can be seen.(End)
ReplyDeleteThe buying interest was seen and from there it went on to hit 3400 on 8th july 2014 thereby generating return of 18% in just over a month from the lower recommended level.