Avoid long positions as it's time to build short strategies

Finally, the markets witnessed a sudden dip on Wednesday with broader selling pressure. The NSE Nifty declined by 104.75 points and settled at 15635.35 points.All the sectors closed in red. Media, auto and realty indices fell the most in today's market. Metal, Bank Nifty, Fin Nifty, Infra indices down by nearly one per cent. The broader indices Nifty Midcap-100 and Smallcap-100 declined by 0.72 per cent and 1.35 per cent respectively. The India VIX further declined 3.1 per cent settled at 14.7525. With the high volumes, and the decline of over 0.5 per cent in Nifty registered a distribution day. The market breadth is negative as 1,217 declines and 713 advances. 259 stocks hit a new 52-week high, and 203 stocks were in the upper circuit before the market decline.

The Nifty finally fell significantly with a high volatile move. A sharp decline of over 200 points in just 15 minutes has created a ruckus in the market. Out suspicion on the limited upside finally has resulted in a big, big down move. A low momentum, low volume, and low volatility hinted at this kind of storming move for the past few days. Today's move with higher volume is not a good sign for the near term. We may not see today's high 15,800 points, at least for the next few sessions. It met all our short-term targets. Across the sectors witnessed the selling pressure.

Now, every indicator is turning down from the overbought condition. Weekly MACD's bullish signal is still elusive for the third week. On a 75-minute chart, the Nifty closed below the moving average ribbon, and the ribbon began to trend down. It is a significant sign of weakness present in the marker. The daily momentum further declined. The Nifty closed at a week's lowest level and tested five day's low. It closed below the 5EMA and able to close above the 8EMA. The immediate support is placed at 15515-15470 zone. It is not the time to be on the long side and build short strategies.

(The author is financial journalist, technical analyst, family fund manager)