Market MATH & Watchlist

5-May-2024

MATH: Momentum Anticipation and Trend by Homma:

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As technical traders, We

“Anticipate, but confirm.

Wish, but only react.”

(Never forget)

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Trend:

We continue to trend Up.

But in the short and medium term, we have reached overbought levels.

A pullback/sideways consolidation looks due.

Momentum:

The momentum after rising constantly for the last 8-9 sessions has now started to decrease.

10-day Momentum shows a lower high.

20-day momentum reversed from the previous high.

Do not be surprised by a pullback/sideways consolidation in the market.

Key Indices:

N500:

After its run-up to its ever-respected rising trendline resistance, it was rejected with a bearish engulfing candle.

A trip to the channel midline or support should not surprise you.

Nifty Bank:

Not the strongest of groups presently but has to potential to become one.

It has broken out of a big base and is now pulling back to the Breakout level.

The Relative Strength has started to outperform N500 and if we have a follow-through, this group could start outperforming in the near term.

This will present a low-risk, high-reward trade.

Private banks:

Has been the laggard as compared to PSU banks, but Relative Strength hovering around 0 line now. A Breakout from which will signal a start of momentum.

PSU Banks:

one of the strongest groups.

consolidating after a big base breakout.

Strong + high risk: reward opportunities here.

Nifty Financial Services:

Very similar in stage and structure to Bank Nifty.

Low risk and a potential to outperform the market in the near term.

Watch out for the individual constituents for opportunities.

Here is the link to the Nifty Financial Services constituents list: https://in.tradingview.com/watchlists/148561312/

Nifty Microcap 250:

Hovering around the big base breakout zone presenting a good risk reward on breakout.

Nifty Smallcap 250:

Broken out of the base and now pulling back.

The bounce off the pullback will be another low-risk opportunity

Nifty PSE:

Remains the strongest and is now approaching the big base breakout target on monthly.

Pharma and Health sector is shaping up well:

Summary:

Strongest: PSE, PSU banks, Metals

Stong with Big base breakouts therfore high risk: reward: Banks, Financials, PSU banks, Energy, Oil & gas.

Potential Relative strength candidates for future: Pharma

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Watchlists: