Earlier this evening, Viren and myself were chatting when he told me about an interesting thing he observed this afternoon on his platform.

He was watching a Nifty Futures chart and an ES chart.
Both were at Value area Lows at around the same time (uncanny).Both moved for a brief while in value before dropping down and moving away from their respective Value Area Lows.

Whilst to me, it points to the importance big money is giving to Profile data, to Viren it simply meant that right now “sentiment is the same across the globe” and always has been…which brings me to the subject of my post today- the NYMO.

Unfortunately, I do not know whether this indicator is present for the Indian set-up, but it is a very important barometer of overbought/ oversold levels.

Nymo NymoThe NYMO works for stocks traded on the NYSE, but if you are a believer in the notion that sentiment is global, then it’s truth applies to all markets.

In the chart, you can see that we have entered in the red rectangle only six times in the past 2 years and we are in it now!

Of course in Oct, Dec and Mar the levels are even more elevated than today, but those times were different and the situation is not the same anymore.
There has always been a pull back in stocks once the NYMO has entered the red zone.

Here is another chart, more relevant to our market and to illustrate my point with our very own Nifty:

The red line is the NYMO and the black one is the Nifty.

Nymo Nymo

The NYMO and the Nifty make their moves together-up or down.

The NYMO is due for a pull-back. the Nifty will follow…