Market status: Uptrend Under Pressure

Distribution days: Six

Global stock markets: Dow30, +0.3%; S&P 500, -0.1%; Nasdaq, -0.6%; Nikkei, -0.1%; Hang Seng, +0.8%; Kospi, +0.9%

Last week, after muted action for a couple of days, Nifty was down around 500 points on Wednesday and Thursday, and added a distribution day on Thursday. The index staged an upside reversal on Friday and closed the week above 14,500. It closed 2.2% and 1.6% below its 21-and 50-DMA, respectively. On Friday, the distribution day count was reduced to six as one distribution day expired. Further, the volume on index when the market corrected was lower compared with average volumes over the last 50-days. Last week, barring Nifty Pharma (+2.5%) and Metal (+0.6%), all other sectoral indices closed in the red. Nifty Bank, Auto, and Energy closed 2.5–4.0% lower.

We will change the status to a Downtrend, if one more distribution day is added or if Nifty breaches its 100-DMA and if market leaders continue to show signs of deterioration in their price actions. On the flip side, Nifty reclaiming its 50-DMA will be positive. Stocks slipping below their 50- and 200-DMA on above average volume should be sold. Consider exiting stocks that have declined 8% from your buy price.

Key News

Adani Transmissions Ltd has signed a definitive agreement with Essel Infraprojects for acquisition of Warora-Kurnool Transmission (WKTL).

Vascon Engineers has received a letter of acceptance for projects worth Rs 515 crore from Uttar Pradesh Public Works Department for establishment of new medical colleges.

-Gold price falls below Rs 44,000 per 10 grams.

O’Neil Market Condition Report

For the 24 emerging markets tracked by our institutional research team, the market status breakdown is as follows: Confirmed Uptrend, 30%; Rally Attempt, 12%; Uptrend Under Pressure, 52%; Downtrend, 6%.

For the 24 developed markets tracked by our institutional research team, the market status breakdown is as follows: Confirmed Uptrend, 52%; Rally Attempt, 4%; Uptrend Under Pressure, 40%; Downtrend, 4%.

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Author's Bio: 

Marketsmith India, One stop solution for all your Stock Market needs. Get stock market ideas and stock predictions all at one place. A proprietary tool by William O'Neil India following the CANSLIM method of investing.