Market Status Shifted to a Downtrend

Posted Date: April 12 2021
- We moved the market to a Downtrend as Nifty breached its 50-DMA on higher volume, distribution day count rose to seven, and many leading stocks failed to hold logical support levels.

- The market status was downgraded to an Uptend Under Pressure on March 18, and since then, the Nifty was rangebound, oscillating around 21- and 50-DMA, and unable to sustain gains.

- Many stocks continued to take on the technical damage with many moving deeper into their respective bases and breaking below logical support levels. Markets are currently not conducive for holding stocks below their 50- and 200-DMA. It is better to protect capital by staying on the sidelines than to take risks. Although it is tempting to buy stocks on pullbacks during a market correction, one should wait for market conditions to improve and avoid catching a falling knife.

- Looking forward, we will shift the market to a Rally Attempt if Nifty establishes a bottom and stays above today’s low (14,249) for three straight sessions. From there, we would prefer to see a [follow-through day] before shifting the market back to a Confirmed Uptrend. Should this occur, the focus will be on ideas breaking out of the early-stage base pattern and showing the best relative strength with good accumulation.

What do you think? Please email us any questions or comments.

Disclaimer: Information contained herein is not and should not be construed as an offer, solicitation, or recommendation to buy or sell securities. It is for educational purposes only.For more information, see our Legal disclosures here.

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