- Nifty chart in the TOP portion shows that it was not able to break the dotted line to UP side and currently has moved from a pullback into a more than 10% correction.
- The modified McClellan Summation Index (blue line)in the BOTTOM portion is still above the red line but converging towards it.
We can clearly see that Nifty MA(100) is moving down while McClellan index is still above its red line, in short both in opposite direction. Every time this happens, we stay OUT of the market and wait for market to cross MA(100) from below.
- Market may snap back and turn above MA(200) but that will require some major event (either global or national) which is less likely to happen at this point
- Market needs to stabilize, which can happen near 4800 area and in couple of weeks will turn around resuming the UP trend
- Market may continue to go down until it retests 4600 area. If this happens then it will be very interesting to see where market will move from that area. It can turn around and form something called "double bottom" pattern which is considered bullish pattern and resume the UP trend. However, if market decides to continue moving down past 4600 area then the BULL trend is OVER and we are back to BEAR market territory.
ONLY time will tell where the markets are headed, so stay focused and be alert...