Find the Top 2.5% of the Strongest Stocks post this market fall.
Scanner and explainer video inside
"The secret to outperformance is Relative Strength" ~ Anonymous
Stock Selection.
When you pick a stock to compound your hard-earned capital, what are you looking for in that stock?
Out of nearly 2000+ stocks in NSE alone, how do you narrow down your list to about 10-20 handful of them as the chosen ones?
Especially after a swift correction like the one we just had?
In this article, I will tell you the only parameter you need, to find a strong stock in any market condition.
I will also explain the exact logic behind the scanners to find the strongest stock during this correction.
PS: Please watch the Video for an in-depth understanding of the criteria of relative strength
The secret sauce of a monster stock: Relative Strength
I don’t care if you are a day trader, a swing trader, or a positional trader.
I don’t care if you trade equities or pork bellies.
If you are a trader of any kind, you trade the relative strength.
Period.
How do you measure the relative strength of a stock?
You measure the performance during a fixed period and rank them. Simple.
Then pick the top 2.5% percent (or the top 1%, or 5%. You get the idea).
These are your strongest stocks.
Your future winners will most probably come from this list.
What timeframe do I personally use?
50 days sounds good for a swing-positional trader like me.
But how do you find the strongest stock during this market correction specifically?
Finding relative strength during this correction:
You first measure the period of the correction.
CNX500 started its descent from when and for how long?
12 daily bars.
It had a drawdown of -5.12% from the top.
Although the CNX500 started to fall from 4 March 2024, the real decline started on 19 February 2024 i.e. 23 daily bars. And had a drawdown of around 5.7%
So what would a strong stock look like during this period?
Any stock that has performed in the top 2.5% during the last 12 (or 23) daily candles and has not had a drawdown of more than 6% (you can relax this to 25% as strong stocks are also more volatile at times. Although, non-volatile stocks are preferred).
You can also add the criterion of “top 5% performer” during the last 50 days to make sure that the stocks were already the strongest even before the market fall.
Getting to the list:
Watch the YouTube video explaining the Homma High RS TTT scanner.
Link to the Scanner.
Tradingview list of High RS stocks in all timeframes (14. 24 and 50-day).
That's all for today.
Trading is damn hard. Losing money every day is not easy. Consistent profitability may seem like a far-fetched idea to you.
But it gets easy with practice, discipline, and experience.
It gets easier with an in-depth understanding of the basic principles of the stock market.
If you want to become consistently profitable in the shortest time possible,
Sakatas Homma can help you in 2 ways below:
Join the Sakatas Homma TA masterclass for beginners:
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Watch the 1st session of the Autumn 2023 masterclass.
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Homma Private Access membership:
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Daily Market Breadth, Momentum, Sector Rotation, and Relative Strength Update.
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Yours
Sakatas “Relative Strength” Homma.
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