Thanks for a very insightful post full of relevant observations. It’s a thought provoking post.
The issue I see with observing only the Nifty/Sensex is that it is dominated by stocks like HDFC Bank, ICICI bank, Reliance, Infy, TCS, Hind Unilever etc. These are the very ones that are under pressure since many trading sessions.
From the volume bars of dates pointed out , I can see abnormally high volumes only on 25th July. Rest of the days marked seem more or less similar with a little variation here and there.
We have had a strong rally from March 23 lows of 16888 to July highs of 19991 , a rally of nearly 3000 points on Nifty and since then we have been in a corrective phase. Here if you see, we have been in a correction since 5 weeks and have not lost even 5% from the index highs. That fact broadly indicates that we are in a routine time correction kind of phase, where the index pauses to catch its breath. The nifty has been holding above its 10 WEMA and well above its 30 WEMA. Retracement wise, we have been broadly managing to hold on to the 23.6% retracement level to the entire previous rally.
And all this while, there has been strong strength in broader markets. On one thing I agree, that a lot of junk stocks have started flying and have rallied in recent past too, but that’s to be expected in a bull market.
So while there can be some observations which might fit in with William O Neil’s theory, the overall picture seems to be okay till now. Though I would like to keep an eye on possible negative markers of major correction if visible.
@Naresh I don’t track Sparc.
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