Investors will be distressed by the sudden downturn taken by the Markets, but this is the nature of the markets and this is what makes it interesting.
I'll try to analyse some supports for positional trading and the strategy one should adopt in such a scenario.
The first major support for the Nifty exists at 4722. This was as strong resistance zone during July to Sep 09, which took the Nifty nearly 3 months to break.
If 4722 is broken on the downside the next majot support ( a very strong one) is at 4600. This has acted as a resistance as far back as July 2007 and has further acted as either a support or resistance at at least 5 more major points in the past as indicated by up and down arrows in the chart attached.
Ideally positional traders should avoid buying until Nifty bounces back either from 4722 or from 4600. If 4600 is broken then all bets are off. So do not be in a hurry to buy, let the markets tell you when it is buying time.
Most of the stop losses would have been triggered last Thursday or Friday and traders would have done well to book losses at that point. The further fall in the markets would have validated their decision.
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