Who wrote this article?

Deepak Shenoy, Capitalmind's research team.

The Return To The 50 DMA

15 Nov 2011Deepak Shenoy1 min read

Quick Facts

What is "The Return To The 50 DMA" about?
What category is this article in?: Charts And Analysis
Who wrote this article?: Deepak Shenoy, Capitalmind's research team.
When was this article published?: Published 15 November 2011.
How long does this article take to read?: 1 min read
What topics does this article cover?: Nifty

Stocks tanked today, substantially, as various unsubstantiated rumours rocked the markets, and Europe continued to be Europe.

(Click for larger image)

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:

An indicator I use often to check swings has decidedly turned negative:

As has the distance indicator that doesn’t seem to indicate a bottom:

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.