Time to apply bearish strategies

The benchmark indices fell sharply over one per cent, with a distribution day combined with negative breadth. The Nifty fell by 154.25 per cent or 1.04 per cent and settled 14696.50. Out of Nifty 50 stocks 38 closed in negative territory. PSU banks were in the limelight with a 3.24 per cent gain. The Nifty Next 50, Auto and Media indices gained by less than half a per cent. The Metal index fell sharply by 2.97 per cent. Bank nifty, Fin Nifty, Energy and IT indices fell by over one per cent. India VIX up by 1.26 per cent. The overall market breadth is negative as 1023 declines and 910 advances. The market has given up all its recent strength. Our suspicion about the recent trend has become a reality. The failed breakout and confirmation to the evening star showing the impact on the market trend. The Nifty declined below the 50DMA and took support at 20EMA.

On a weekly chart, with all probability, going to be a bearish candle dark cloud cover. Today, Nifty also fell into the falling channel. The RSI faced a stiff resistance near 58 zones and turning down. It is meeting Andrew Cardwell's range of shift rules, with bearish implications. On a weekly chart, it has formed a new swing high. In any case, the RSI (58.81) falls below 55, which will signal the longer bearish signal. The negative divergence is still valid. The momentum turned to the downside.

The index's breadth and the broader market breadth turned negative. The negative directional indicator -DMI once again moved above the +DMI. The ADX declined further. These directional indicators have given the weakness in advance. On a 75-minute chart, the MACD fell below the zero line, and the MA ribbon turned down. The above technical evidence is showing the bearish signs. Currently, avoid fresh long positions in the index, and apply bearish strategies, focus only on stock-specific activity.