Qullamaggi Market Lights

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General Market Condition (The Traffic Light)
Before buying any individual stock, the overall market environment must be in an uptrend. Most breakout trades fail during choppy or falling markets.


• The Rule: Apply a 10-day Exponential Moving Average (EMA) and a 20-day EMA to the primary market index.


o Green Light (Trade Aggressively): The 10 EMA is sloping upward, the 20 EMA is sloping upward, and the 10 EMA is trading above the 20 EMA. This is the only environment where accounts compound rapidly.

o Red Light (Sit in Cash / Do Nothing): The 10 EMA falls below the 20 EMA and both slope downward. Breakout failure rates skyrocket. Stop trading breakouts and hold cash.

o Yellow Light (Choppy/Sideways): If the market moves sideways, trade smaller sizes; breaking even during these phases is considered a win.

• Indian Market Adaptation: For mid-cap and small-cap swing trading, do not rely solely on the Nifty 50. Track the Nifty Smallcap 250 and Nifty Midcap 150 indices with the 10 and 20 EMAs to confirm broad market breadth.

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