[Premium] More "Oopsies" As Market Chop Continues

Here's the Nifty 500 chart we've been using as our guide. As we've discussed, the 200-day moving average is still flat, momentum is diverging negatively, and prices are once again confirming a failed breakout by closing back below their August highs.

These conditions suggest that stocks are likely to remain choppy and volatile until the index can close decisively above 9,900-10,000. It also doesn't help that International stocks are also experiencing some near-term weakness, which will be a headwind for India.

Click on chart to enlarge view.

Here's Reliance, which we were selling during our October Conference Call, as we saw began to see a rotation out of leading stocks and into several laggards. Since then, prices have confirmed that failed breakout and begun to correct. This suggests that if we're seeing similar conditions in other stocks, we ought to pay attention.

A name like Adani Enterprises is vulnerable to correct more than 10% towards 260 if prices break below 305.

How about Torrent Pharma? After some acceleration off of support, prices are right back down to this 2,625 level. A break of that 3-month consolidation to the downside would not be a bullish development.

And Ramco Cements, which is failing to hold above resistance at 780. If prices are stuck below that level, there's potential downside towards 690.

How about Tech Mahindra, failing to hold above long-term resistance after a big run? If prices are below 860, a correction towards 730 wouldn't be crazy.

Or Voltas Ltd, which is stuck below 720 and extended from a flat 200-day. If prices are below 720, then there's risk for a move down towards 630.

How about some laggards, like Bajaj Finserv Ltd. Prices failed to get back above 6,100 and are now moving lower. Next stop 5,000?

Last on our list is Bata India, which remains stuck below resistance at 1,420 with momentum in a bearish regime. If things really get going, we could see a move back towards the March lows near 1,050.

How these stocks act will give us useful information about how stocks could act in the near-term. Also, pay attention to the long setups we discussed during the Conference Call.

Are more short or long setups working? That's the lens we want to continue to view the market through.

For now, a defensive approach with a focus on only the cleanest reward/risk setups continues to make sense. There hasn't been a reason to be swinging for the fences in more than two months and the recent action hasn't changed that view.

And if you want to be short anything on an absolute basis, these names and those discussed during our Conference Call are our best shot at success.

Thanks for reading and please let us know if you have any questions.

Allstarcharts Team