What goes around, comes around

After a profit taking day, it is good to check how broad market is doing.

1. The AD ratio has been good in last 5 trading sessions.

2. No of stocks > 50 DMA is now > 400 for 2 days in a row.   Bodes well for broad market, and the negative sentiment which remained for almost 2 months after Satyam fiasco is not not there anymore.

Nifty has advanced 8.6% in 5 trading sessions from 2573 on 9^th Mar to 2794 today. 

Following table gives information on Nifty percent changes and stocks AD ratio over 5 days. That information is based on day to day comparison.

Later in the table it gives up and down % changes over 5 days. So Today figure in Up % 5 Days refers to % change from price 5 days ago i.e. D-5. D-1 figure refers to % change from D-6. It will be easier to figure out from table given below.

Nifty made a quick attempt to cross 50 Day MA in morning trade but failed from there.  It was expected since it would have been a miracle to rise so fast in a short time and then close above 50 DMA in a jiffy!

What's more interesting is the way NH-NL has moved sharply from -390 on 6-Mar to -36 today.  It points to strengthening in broad market.  An almost about turn from a few months low to near 0 levels!

AD ratio has been doing rather well.  Even today value of 0.95 is not bad for a down day and volatile one at that.

BSE Auto Index: The best index in terms of recent strength.  All the doomsday scenario about Indian economy is not in evidence here.

BSE Bankex. The laggard of Nifty.  If it does not go down a lot from here that will be good enough.

Reliance and ONGC are the two big daddies of Nifty.  So Nifty movements cannot diverge significantly from what these 2 are doing.

Reliance chart below shows a broad range with upsloping trendlne at bottom.  That upslope in trendline means in fact that Nifty is being supported between 2500-2600 by Reliance.  Other indices like Bankex and Capital goods index might be doing badly in recent past but they cannot bring Nifty down on their own.

A few days back I had given my understanding of Gold futures here.

On looking back, I realize that I was hasty in drawing conclusion that a seeming support at  trend channel's lower line will lead to bounce back to 1000 levels.  One of the major reason against it was the continuous decline for 7 days before the bounce day finally happened.  Needless to say, I stand corrected and wiser.

Below is the chart as of Fri.  The picture has become interesting now:

 I am not a trained economist so I will make my arguments based on my knowledge and some healthy dose of common sense. I will assume the recent trend growth rate to be 8-9%, because 9% was around the number at which economy grew in last 3 years. For 2 years before that it was healthy above 8% rates. So a significant slowdown would be one where the growth rate becomes half of the recent trend growth rate. A 4-4.5% growth rate for FY10 would mean that we slowed down.

After 2 holidays, good volumes seen in both cash and NF.  NF vol for last 4-5 days are quite good in fact.

I have now added information for 5 days at a glance.  I plan to post the table some days of the week when there is some insight in data.  With 5 days of information, one will be able to see the trend and values from previous days too.

1. Reverse trap day: A day when you think market should move in line with global cues but you get trapped since it does the opposite.  Who would have thought Nifty will be up 1.5% when US markets crashed overnight and Asia was week too.  Yesterday was another reverse trap day.

2. The cash and future volumes are also somewhat higher than yesterday.  Not sure how significant is that except NF volumes have increased over last 4-5 sessions.  I will take it to be shorting and selling by FIIs but market got supported due to DII buying.

3. The NH-NL crashes to -390, and makes a lower low than -298 value in Dec month on 2nd Dec.  One by one, indicators seem to be suggest that hope of a quick recovery for broad market is not going to happen anytime soon, at least 6 months.  Though low values have been seen earlier followed by bounce in Nifty and broad market, something suggests that this is more of sustained selling to get into cash and stay in cash.

4. AD is also bad, which only confirms that broad market is not seeing any positive rub off from bounces in Nifty lately.  Up/Down percents also confirm the highly negative sentiment for broad market.

Copper Futures are showing some kind of bottoming out and consolidation recently.  It has reacted after crossing the Feb high.  Also, it has made higher high/ higher low pattern starting from month of Jan.  These highs and lows are inside a channel and it could be a low risk buy near the channel bottom.