- 2013 Current Chart - Nifty crossed MA(100), McClellan Index has already crossed EMA(59) and MA(100)
- 2010-2011 - Nifty topped near 6200 area while McClellan Index was already in downtrend
- 2007-2008 - Nifty topped near 6300 area while McClellan Index started its downtrend
What is the common theme here?
Topping pattern takes couple of months and only in hind sight you can determine the market has changed the trend. Hence it is not easy to spot trend change when it is happening but we can get clues based on below charts. However, its a probability and NOT a guarantee.
What does it mean for our Investments?
- Mutual Funds - Market appears to be in correction and shall soon attempt a bounce, based on the bounce attempt we can determine if we shall remain invested or exit the markets. Ideally when market crosses MA(100) and McClellan index is below EMA(59), we consider it as our SELL signal BUT no need to rush.
- Stocks - It is wise NOT initiate new positions as market appears to be in correction and most stocks will experience a drag. Make sure you have STOP LIMIT on existing open positions to capture gains if stock slides below your STOP level.
Market in correction mode, stay alert...