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Charts & Analysis

Nifty Stocks Below Short Term MAs: Peak?

I’ve mentioned this in the MarketVision Chronicle earlier (See this note) that when the Net Number of stocks above short term moving averages tops or bottoms out it usually indicates a short term market move. (Net stocks = Number of stocks above MINUS number of stocks below; I take the 5 day average of this figure to smoothen it out, for short term MAs, and a 10 day average for the long term MAs).

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See this post for an earlier image of what I thought was a potential bottom. In the recent past this indicator has peaked before the index has, but it can be way too early and can fake you out. What’s evident from the recent past is that a cross below the zero line is decidedly negative for the index. I’ll keep looking.

Plus I have to shape this better – the number of days a stock stays below and the distance from the MA should count for something, and I have to include that as well.