The markets have surprised a lot many people (to be frank,including myself) by its recent decoupling from the global markets.Many have justified the up move to the deflation playing out in the west.However,as a technician,i needed some strong confirmation from the charts.And not to my surprise again,the charts are speaking the truth.
Below I am attaching chart for Nifty breadth for short term(20 day moving average), medium term(50) and long term(200).
The long term breadth chart (Nifty – 200) tell us us percentage of stock in NSE which are above their 200 day moving average. The current reading is 74%. The medium term breadth chart (Nifty – 50) tell us percentage of stock in NSE which are above their 50 day moving average. The current reading is 72%.
The medium term breadth chart (Nifty – 50) telll us us percentage of stock in NSE which are above their 50 day moving average. The current reading is 72%.
The short term breadth chart (Nifty – 20) tell us percentage of stock in NSE which are above their 20 day moving average. The current reading is 75%.
Following is my observation:
- On the long term,we are far away from reaching the bubble stage that everyone is talking about.A reading of 80% is a very early warning for that stage,while anything above 94% is a signal of immediate collapse.
- On the medium term,the current reading stands at 72%.Anything above 80% is a signal for a medium term trend change.4 *
- The short term reading of 75% is reaching that overbought zone towards 80%.(oversold in September first week resulted in a bounce back from 5350) [click to continue…]
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