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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.

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