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Gaps- The new high



An index is supposed to be a (rational) performance indicator of an economy's secondary markets. Yet lately the Nifty50 has been behaving quite irrationally and charting all over.


Between 6 Sep 2021 and 2 Aug 2022, the Nifty50 had 226 trading days, Of which we have had five significant tops & bottoms with almost 10% swing in each direction. Yet the market is a net ZERO [Closing - 6 Sep 2021 - 17377 | Closing - 2 Aug 2022 - 17345].

One interesting phenomenon in this entire chaos has been the Gap. All five tops were rallies in a correcting market. Each rally presented one to three gaps before they seemed to have lost steam and further corrected up to 10% on average. Each rally had the investors wonder if they had lost the opportunity to double down on their positions or buy new stocks.




1) 1 October 2021 to 20 December 2021-


53 trading days - 10.17% correction after 3 Gap ups.

A significant drawdown was pending as the sentiment had far overshot the earnings resulting in unjustified valuations.

A healthy correction


2) 27 January 2022 to 7 March 2022-



26 trading days - 10.74% correction after 3 Gap ups

Ukraine invasion - 24 Feb 2022

Yet the next rally started after 6 trading days and created a pseudo-higher high


3) 8 March 2022 to 13 May 2022-



46 trading days - 12.75% correction after 3 segregated Gap ups

All the up swings were gap driven and the markets were majorly sideways in between the gaps. Another instance of markets losing steam


4) 19 May 2022 to 16 June 2022-



23 trading days - 8.25% correction after 1 segregated and 2 Gap ups

Net zero of 36 trading days

14% combined non-directional swing resulting in one of the highest OI changes


5) 3 Gap ups - 28 July 2022 | 29 July 2022 | 1 Aug 2022



Not to assume that the same pattern would follow attracting a 10% correction.

Yet to ensure that one does not feel left out or have missed an opportunity like the last 4 market circumstances.

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