That stark warning on the homepage:

"Indexes are plummeting, portfolios are bleeding, liquidity is dried up, and confidence is in tatters.."

This isn't just a fleeting observation. It's a reality many are experiencing.

And understanding how to react starts with a clear, data-driven approach.

Like the one we'll explore here using a powerful indicator: Simple Moving Averages (SMAs).

Let's dive deeper and understand how tracking stocks relative to their SMAs can offer valuable insights into the market's true condition.

And then we will provide you an action plan to navigate through these uncertain times.

When it comes to understanding the underlying trend and filtering out the daily noise of market fluctuations, few indicators are as effective as monitoring how many stocks are trading below their key moving averages.

Let's call this "SMA count", and it acts as a crucial filter, revealing the market's health beneath the surface chaos of daily price movements.

Think of it this way:

To illustrate this powerful relationship, let's look at the chart below. It plots two key data points over time:

• The SMA Count: This line represents the date-wise count of all stocks closing below their long-term moving averages (specifically the 200-day, 150-day, and 50-day SMAs).
• Nifty Levels: This line shows the corresponding movement of the Nifty 50 index.

This chart isn't just a visual representation of numbers. It's telling a story about the market's health.

By observing how the Nifty's movement correlates with the SMA count, we can identify significant market shifts and distinguish them from mere day-to-day volatility.

Notice in the chart how extreme highs and lows in the SMA count often precede major turning points in the Nifty?

This isn't random.

It's the market signaling its underlying strength or weakness in a way that headline index numbers alone might miss.

Let's analyze the relationship we observe in this chart, spanning from mid-2021 to early 2025.

By examining the chart, a clear relationship emerges between the SMA count and the Nifty index:

• Inverse Relationship Dominance: For the most part, there's a strong inverse relationship. When the SMA count increases (meaning more stocks are below their moving averages), the Nifty tends to decline or remain stagnant. Conversely, a decreasing SMA count usually coincides with a rising Nifty.

• Key Periods of Inverse Correlation:

  • Mid-2022: The SMA count peaked around 750-800, coinciding with Nifty weakness.
  • Early 2023: Another SMA count peak occurred during a period of Nifty consolidation.
  • Mid-2023: A significant drop in the SMA count preceded a robust Nifty uptrend.
  • Late 2024 to Early 2025: A rising SMA count accompanied Nifty weakness, before both reversed direction in their typical inverse manner.

• Divergence Periods - A Note of Exception:

  • Around Early 2022: We observe a period where both the Nifty and SMA count rose simultaneously. This temporary positive correlation is a divergence from the norm and highlights periods where broader market dynamics might be at play, potentially indicating sector rotations or other market transitions. However, the dominant inverse relationship soon resumed.

So, what are the key takeaways from this relationship, and how can you use this information to make smarter trading decisions?

Now, let's translate these market insights into actionable trading implications, especially in light of current   "Downtrend in Progress" assessment (currently SMA count at historical high's):

Remember, "the strongest rallies often begin when sentiment is at its worst."

While the rising SMA count suggests we may not yet be at that turning point, monitoring this indicator will be crucial in identifying when market sentiment truly begins to shift.

For now, it's wise to "let the market show its hand before committing your capital."

So here is how you should behave for long term success.

In conclusion:

Tracking the SMA count provides invaluable insights into the underlying health of the market.

A perspective beyond the Nifty index alone that empowers you to make more informed investment decisions, especially when navigating uncertain market conditions like the present.