The soft downward signal from the MACD has been in place since the end of last year is starting to turn and has just crossed.
One more encouraging sign is the Momentum study which is turning up slightly and volume is improving. You can see the spike in volume on the weekly chart. All this underpins the more bullish tone but the daily chart has been very overbought.
I have added a 14 period Relative Strength Index (RSI) and you can see that even the weekly chart is flirting with overbought and when that happen last time in Q2 the market slowed down significantly.
The index is also obviously finding some support from the old 61.8 pct Fibonacci retracement level, as you can clearly see on the top chart, every time it corrects back.
India continues to outperform the performance of global stocks to a significant degree.
------------------------------------------------------------------------------------------------------------------------
Put Call Ratio and the Nifty
The definition of Put-Call Ratio (PCR) is as follows:
The ratio of the volume of put options traded to the volume of call options traded, which is used as an indicator of investor sentiment (bullish or bearish).
1 school of thought says that a high PCR means more number of Puts have been written and markets should go ahead. Another school of thought says the converse.
Lets go by the data in hand for past 1 year.The market has bottomed when PCR was around 0.8-0.9 and topped when it was 1.2 or above.
I have marked in black the instances where the PCR was above 1.2. At this point of time, the market remains flat for a day or 2 by which time the PCR comes down to lower level or the market tanks.
This last leg of rally, the PCR was low (below 1.2), thus allowing the markets to go higher. On Friday, it crossed the Danger mark of 1.2, thus indicating caution.
Going by that logic next week should be flat or down. Let us see what comes true.
No comments:
Post a Comment