What's Market Telling?
Recent past price action was very constructive as the DJ indexes traded above 200-day moving averages. Nifty broke out from a channel. While this doesn’t guarantee a bottom is in, it is the first step in a possible bottoming process. The markets have quickly gotten ahead of themselves, and while they may ride the current momentum a little higher, the more likely scenario is a retracement of at least a portion of this week's rally. With summer practically over in US, the next few weeks should usher in an increase in volume and provide more clues as to the next move in the markets. Either way, it's looking like there could be a strong move in autumn.
Some interesting stock activities are to be looked upon.
Despite the fact that the markets have shown some promise recently, you must have observed that some previous hung-ho stocks like Praj Ind, Punj Lloyd etc remain at their lows and also vulnerable to further downside. Most of them have fallen under a base and have put many market participants in a losing position. The markets could also realistically turn lower from here as well, adding pressure on potential sellers.
The key for each of these will be to watch the price action as it tests the lower ranges of the prior bases. A failure there would mean that there are still sellers looking to get out near those levels, and they may start looking to get out at any chance they get if the stock reverses. If buyers are able to overwhelm the first level of sellers, it would at least create a new level of support from which a trader can base his or her decisions. It’s still too early to tell which scenario will apply, but the path of least resistance is likely lower for now.
However, I would say to have a look on article in Investor call "Real or Wishful Thinking?"