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Charts & Analysis

The Return To The 50 DMA

Stocks tanked today, substantially, as various unsubstantiated rumours rocked the markets, and Europe continued to be Europe.

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With the return to the 50 DMA, we have retraced 50% of the upmove from the lows 4750 to the recent “touch” at 5400.  The Nifty was okay, in comparison with the other indices today:

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An indicator I use often to check swings has decidedly turned negative:

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As has the distance indicator that doesn’t seem to indicate a bottom:

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I would be quite surprised to see the move stop here, but obviously nothing goes straight down; I do expect some sharp upmoves as well. Still, the only trend trade is to be short.

Disclosure: I’ve been short banks and own a strangle (5200-5400) which came out to be quite profitable (about 20%) today. On the long end, positions are steady (Smartlink, Piramal Healthcare, some Hero Honda, some Crisil) and being maintained with a strict stop loss.

  • Jay says:

    Deepak,
    I have noticed a abrupt drop in the EPS of IISL indices posted on NSE website between 31 Oct ’11 and 01 Nov 2011. Tried looking around for press releases to explain the change..could not find any.
    Any conjectures for such a significant change overnight?
    Cheers
    Jay