Jun 072010

The Dow Transports and the small cap Russell 2000 closed below their respective 200 DMA.  These were the 2 important indices that held above this much tracked level all through the Month of May and this could mark another significant breakdown in the US markets.

Dow Transportation - Daily Chart

Russell 2000 - Daily Chart

As long as the Transportation index was holding above its 200 DMA the chances of recovery remained. Now with this move, those chances have gone up in smoke.

The small cap russell is a good measure of risk preference of investors. Once again, with a close below 200 DMA, the risk taking appetite has probably been flushed down the drain.

While Indian markets have been the best performer during the current decline amongst the BRIC countries - this may very well become the reason for a more pronounced sell off, as short sellers start targeting the out-performers.

For those interested, here is what I had said on CNBC this morning:


  3 Responses to “Some more indices below their 200 DMA”

  1. Good one…the interviewer seems stunned…or shell shocked, when you said rupee 49 or even north of 52…dint react much when you said 4300 for the nifty though…lol

  2. That’s because her area of expertise / focus is money markets and currency. She doesn’t know much about Nifty.

  3. Dear Sir, please keep writing. Please share your views frequently. A lot of hopes are eying your knowledge every morning 🙂

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