Weekly Market Update – Nifty strikes deep

 

Nifty strikes Deep but very overbought… expect some pullback otherwise be prepared for the blow-off rally

 

The Intermediate-Term Trend:

  • Strong follow up to the ascending triangle breakout of the last week. Nifty moved up 3.55% for the week.
  • Very Overbought – Weekly close outside all three Bollinger bands, no precedent in last 10 years.

 

Nifty Weekly

 

Nifty Daily: 

  • The EMAs are expanding nicely.
  • Overbought at the beginning of the rally is positive, the trend is strong and will continue.
  • Will have a pullback/sideways movement in the short term.

 

Nifty Daily

 

The Trend O Meter:

  • Above 20 means trending.
  • Strong trends are hard to reverse and finds lots of willing buyers on the pullback.

 

Nifty with ADX

 

Broader Participation: 

  • The outperformance of Nifty MidCap & SmallCap signals the beginning of the rally in mid-February.
  • On a six-month basis, Nifty MidCap & SmallCap index is underperforming the Nifty. Not a healthy sign of a sustainable bull market.
  • Very recently, in the last four days, they have again started to underperform after a brief outperformance of one month.
  • A small red flag but nothing serious yet.

 

MidCap, SmallCap & Nifty

 

Risk O Meter:

  • VIX should fall with the rally which is not happening for the last few days.
  • The VIX EMAs are turning around from just below 15.5 mark, the previous resistance.

 

INDIA VIX

 

 

Market Breadth:

  • Some chinks in the armor – Breadth has started to diverge from the trend.

 

AD Line ( Source – Traders Cockpit )

 

 

 

Weekly Market Update – Nifty strikes deep
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