ASI successfully defended 6050. Rose above 6100!!!

Naysayers are there every where. Going down the memory lane of eradicating the terrorist menace back in 2008-2009 period, how many laughed and mocked. But what happened? This time the same players who took the risk of hostilities are testing different possibilities in making the economy work. Moratorium was one such tested possibilities. If it works it will be good to many sectors, thereby Banks. After the end of terrorism in Sri Lanka, people of all walks of life feels the importance of having a strong mechanism to build a strong structure to make the Economy rolling. Looks like the important elite of the society including those at the top  of institutions (Including Banks) are rallying round the Policy Makers to make it happen. Business leaders have realized the importance of a Strong Structure to have a Strong Economy like never before (I Hope).

Critics had reservations on the impact of tax rebates, and the moratorium, no sooner they were announced. This brought sellers into the market during this week of 4 trading days. When investors/traders saw clarity they took the opportunity of this selling to accumulate further. If many of the new options that are being tried by the policy makers succeed, the breaking out of all time highs in the next few years will not be a surprise. Stock Market needs participation, both local and foreign, and that participation needs to happen in large Turnovers. Not for a short period, but it has to happen in the near term. That near term could be as near as 3 months to as long as 12 months. If the money flow to the market is not going to happen in that 3 to 12 months, expecting better times in the bourse  could be another dream not coming true. In that context these strategies of the Policy Makers will be interesting, and hope that they will succeed.

Since the Index successfully defended the support area of 6050, it will now try to take support above 6100, and try to form a base in the present resistance zone of 6122 to 6185. If the index succeed in holding that area it will be the stepping stone for the trend continuation which could make the ASI rise above 6200 to test higher highs. The bullish divergence witnessed in the RSI had to rise above 50 points for the rising momentum. This happened during the week. But the rise was too aggressive which could fluctuate during behaviour of the index within the aforementioned area of resistance.

Click here of my post on the ASI on 14/12/2019

Click here for 18/12/2019 post on the ASI

Click here for 20/12/2019 update on the ASI