- Nifty remains well below MA(100) while MA(100) continues to trend downwards
- McClellan Summation Index is above EMA(59) but can it sustain the move!!!
Below is a long term chart of Nifty (top chart) and McClellan Summation Index (bottom chart) providing some valuable clues:
- Watch the oval shaded areas where McClellan Index (bottom chart) appears to make troughs or reach lowest point
- Watch corresponding vertical dotted line as it intersects Nifty (top chart)
- After every major bottom in McClellan Index, market appears to make strong BULL run
- Market immediately moves above MA(100) which confirms the major low in McClellan Index
- Every BULL run appears to be sustained for longer duration of several months to years
We conclude that market is firmly in bearish territory and we might see a bounce attempt in coming days as market appears to be oversold. However, we do not believe that this market has bottomed yet hence be vigilant and DO NOT get sucked into bear rallies. Missing initial rally is perfectly fine, but entering the market after confirmation is wise.
What does it mean for our Investments for now?
- Mutual Funds - If still invested in equities then time to hold onto this roller coaster ride, exiting now will be very expensive and painful. No need to rush to start SIP unless we get positive trend reversal sign. If in cash/ FDs/ liquid funds then it is wise to stay on sidelines.
- Stocks - ONLY invest in strong patterns with good earnings guidance and DO NOT forget to have STOP LIMIT on open positions. When market is in correction, it will drag everything down with it. Check out our trade size calculator to manage your risk along with potential buy candidates watch list.
Market remains firmly bearish, stay away.