Risk-reward out of favour but a collapse less likely in pre-election week: Anand James

economictimes.indiatimes.com:

Even though risk reward is quickly appearing out of favour, a collapse is less likely this week, says Anand James, Chief Market Strategist, Geojit Financial Services. “Downside marker may be placed at 22983, for an aggressive positioning, with further support seen at 22800,” he says. Edited excerpts from a chat:

How have Nifty charts changed after recording two back-to-back weekly gains? What are the odds of a correction now in the pre-election week and the monthly expiry?
Anand James: About a week to go for the big day. In 2019, Nifty had fallen over 6% from the recent peak as it was about to enter the last week before elections results were announced. And with that fall, VIX which had been steadily rising from 15 would reach a peak of 28.65, before starting to ease in the week before results. In stark contrast, we are already at record peak, with chart patterns continuing to point further north, towards 23200-23350. And, VIX at 22, while not as high as what was prevailing in the similar period of 2019, is at its highest this year. But, what is more striking this time is that volatility has been persistent and VIX has been holding steady in the vicinity of or above 20 for nine days.

Further, oscillators are overbought but directional moving indicators suggest strength in ongoing upsides. Hence we feel, even though risk reward is quickly appearing out of favour, a collapse is less likely this week. Downside marker may be placed at 22983, for an aggressive positioning, with further support seen at 22800.

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