… Markets are constantly changing.  As a trader, you need a strong foundation to weather the storm.  Over the last few years, as traders, we have had to weather a devastating storm. 

NIFTY after completes 0.618% retracement, market is now not giving clear direction.

From the above chart a small thing is emerging on the first look. The EMA which is placed on the chart is turned red and moving downward since last 15 days and the force is turned down. From last three days it is trying to come out but failed to do so. On the other hand ADX (lower window) is in bearish mode (since red -D line is above green +D line indicates that though market is trying to show some strength or rally but in fact smart money or buyers are not there unless +D moves above –D. So short term immediate trend is bearish or weak and unless this both indicator turns green rally will be difficult to sustain.

·          The Relative strength of the small cap index and CNX midcap v/s Sensex have formed an H & S near a triple top range. Each time the RS has fallen from the upper end of the range it was followed by 1 year of under performance by small cap stocks. So expect a clear shift in leadership to large caps.

·     The Bottom Line: one more day nifty ended with clueless and turned without any clear picture. However, 5924 and 5884 are more important for the next couple of days.  On the other hand sector wise panic is going more weak like Bank sector weak with -5.17% during the ongoing week. While small cap continues to be under pressure with PSU and MIDCAP WITH -1.41% and hence some strong unwinding can be expected in the coming days. After this panic I expect change in trend.

On the other hand surpassing of 6005 and then 6080 will give strong upward thrust. While, metal is coming out from its corrective/bearish phase. Due to rise in international oil price oil sector is gaining strength. Even software stock is showing strength due to strengthen of dollar.

On technical front NIFTY is trading below its EMA which is turned red and direction is also down hence we can say that the short term is weak