Saturday, August 10, 2013

Nifty: Understanding TRIN indicator & NSE Midcap index

Arms Index – TRIN
TRIN is a technical analysis indicator that compares advancing and declining stock issues and trading volume to understand if too much volume has gone into advancing or declining stocks.
TRIN =   Advancing / Declining stocks
 Volume of advancing / Volume of declining
Chart courtesy:icharts
We are showing TRIN indicator that measure how much volume has gone into declining stocks compared to that of advancing stocks. This indicator (red line) has now reached near extremely overbought zone seen in past 1 year that indicates the short term consolidation or pullback is due on Nifty. However this does not mean that prices should start rallying now but internal wave counts of Nifty is important to be evaluated along with this supporting indicator. The daily equity research report “The Financial Waves” short term update gives overall perspective on Indian markets.
NSE Midcap Index Daily chart:
Waves Analysis:
NSE Midcap index has been one of the underperforming index against major index Nifty since July 2013. Prices have found resistance of upper end of the blue channel, sustained below the strong resistance of 7500 and moved lower sharply. After strong reversal from the channel, prices closed below the previous day high consecutive for 10 trading sessions and moved lower till 6500.
NSE Midcap index broke the crucial level of 7000 in the mid of July itself. Whereas, Nifty broke the crucial levels in last week and started the next leg on downside. This indicates the inherent weakness in Nse Midcap index in the broader market over medium term.
As seen above in daily chart, prices are moving in the downward sloping blue channel precisely since June 2013. At present, prices have arrived near lower end of the falling blue channel. Earlier, prices have bounced back from the channel and moved higher. Hence, we can expect minor bounce or consolidation from the current level as long as this channel is intact. Over short term, if prices move above…….
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