A correction brewing in for IT index

In last two days, we have seen a sharp turnaround in IT stocks from a full-blown up move to a sharp U-turn. In fact this sudden reversal in IT heavy weights is no surprise at all as they are trying to follow their American peers.

As long the NYSE composite was trading near upper zone of rising wedge, Indian IT stocks have seen a sudden surge as they were gearing for a triangular breakout. Currently IT index is coming lower to break the support of running triangle.

The immediate breakdown trigger for BSE IT index is 2.2% lower, below which there is a possibility of 20% downside or more.

We also have a case of breakout in CBOE VIX on daily basis for the first time in the last 3 months, although earlier attempts were sold into.

The NYSE 3000 Composite should provide a lead direction for global markets as it is 0.3% away from a major breakdown. There is also a Big SELL signal which is seen in Dow Jones index which is projecting a Min target of December Lows.

Overall data suggest that risk is increasing at current levels