Mkt upside maybe petering out, small short position justified: Ashwani Gujral

In a chat with ET Now, Ashwani Gujral, Fund Manager, Ashwanigujral.com shares his outlook on the market.

ET Now: How are you assigning this little step back in the market?

Ashwani Gujral: Well, we traded couple of days in a very narrow range. Today, we have come out of that range on the downside. Also, we are just about hanging around the previous intermediate highs about 6140-6150. Now in case we start breaking these levels and start trading below these levels, chances are that the breakout that happened from here may be construed as having failed.

Now the way to do this is that you take a fairly small short position with a 50-point type of stop and see what happens because given the divergences that are developing on MACD histogram, etc, it appears that maybe momentum towards the upside has petered out.

So often when such things happen you do not immediately know whether a trend reversal is going to happen and basically the move should happen towards 6030-6050, then a pullback and then a final reversal, so right now having a small short position is justified.

A long should be cut because clearly the trailing stop which you had been updated to about 6140-6150 has been violated.