MarketsmithIndia Articles

Market Status Shifted to a Downtrend

Author: Rushit Sejpal

November 26 2021 | Reading Time: 2 Minutes
- Today, we changed the market status to a Downtrend as the distribution day count is at six. Nifty is trading below its 50- and 100-DMA and is more than 8% off highs. Many leading stocks have breached crucial levels.
- The market status was changed to an Uptrend Under Pressure from a Confirmed Uptrend on Monday after Nifty failed to reclaim its 50-DMA.

- Stocks continued to take on 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 on risk. 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 (16,985) 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.

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