Situational Awareness as on 8th Feb 2023

Market Breadth

We are bouncing off the oversold area as can be seen from the market breadth sheet. Number of stocks with pocket pivot candles were also higher compared to the previous days. Add to that the bounce-off in Adani stocks, which is a big positive for retailers.

Nifty500 Weekly chart

We are bouncing off from the support zone. Stocks that are making new highs currently are obviously rising faster than others. We had a positive white candle for the week. Important, because it is coming near the support zone. It is important for us to move upwards now. We are still in a sell-on-rise market and any further fall will be a signal to quickly close open positions. On charts, the weekly Nifty500 chart also looks like an Inverted H&S pattern after an uptrend.

We should be able to take the high of the previous week’s (23rd Jan) black candle convincingly for a good run upwards. (Just to recall - we were not able to breach the high of 19th Dec weekly candle for over 3-4 weeks, and what followed was 23rd Jan black weekly candle.)

Nifty500 Daily chart

Today is the first day to attempt reclaiming the 200EMA. This is an important junction now. If we are able to reclaim the 200EMA, the immediate resistance will be the declining 50EMA. These are not magic lines, but they’re important because traders worldwide scan and take action based on these lines. Once that is also done, we should be comfortably breaking the previous lower high of 15460.

Conclusion: It’s time to get into longs, though cautiously. Recently announced quarterly financials + Relative Strength must be checked in order to not enter into those stocks which are already weak. Strategy remains same - have lesser number of open positions since market structure is still weak. We have only seen a couple of days of bounce and one cannot rule out a further fall from here.

Current exposure - 47% invested, with 5 open positions.