MarketsmithIndia Articles

Market Status Changed to a Confirmed Uptrend

March 31 2020
-Nifty closed the day with strong gains, up about 3.8%, on higher volume than yesterday’s session.

-As the volume was higher and percentage gains met our threshold, today’s action was considered as a follow-through day and we have upgraded the market to a Confirmed Uptrend.


What to expect now from Confirmed Uptrend ?

-Looking forward, additional follow-through day will strengthen the current uptrend. We will look for leadership among some good stocks to push the market up. On the flip side, tracking distribution days is crucial. Accumulation of distribution days can halt the uptrend.

-Nifty is trading more than 20% below its 50- and 200-DMA. We will be very selective about taking any fresh position.

-Without trying to predict and decode stories, take what the market gives and continue to monitor unfolding conditions. Stocks that have higher relative strength and superior fundamentals can do well.

-Some leading stocks have sharply corrected. Wait for them to put in at least a short period of consolidation and show a constructive breakout from that range. Buying without this period of constructive behavior into a straight upmove off the bottom, puts you at risk of drawdown.

-It is important that investors don’t play all their cards at once. Hence, we suggest adopting an investment approach where you begin with a small allocation and increase it as and when the market advances further.



 

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