MATH: Momentum Anticipation and Trend by Homma:
MATH last week: Click the link
As technical traders, we
“Anticipate, but confirm. Wish, but only react.”
"Skate to where the puck is going to be, not where it has been." ~ Wayne Gretzky
By anticipate, I do not mean “make positions earlier”. What I mean is, assign probabilities to all possible scenarios of what could happen next. And be mentally prepared with the response. It is a mental exercise. It helps you act faster when the confirmation eventually comes in.
Short-term: “Percentage of stocks above 10/20-DMA”
Medium-term: “Percentage of stocks above 50-DMA”
Long-term: “Percentage of stocks above 200-DMA”
In the short term, trending down.
In the medium term, bearish and trending down.
In the long-term, bearish and trending down.
Momentum:
Homma Mswing Score: (basal Momentum)
Mswing score is still bearish (below 50%) but has shown minor improvement last week.
Still at very repressed levels.
Landry Daily: (hard Momentum. Momentum Bias for Swing Play)
Hard momentum is now trending Up.
(Momentum plots are more lagging in nature. this uptrend could be the result of the bullishness we saw early last week and may yet to reflect the bearishness of the last two days)
Landry Weekly (Momentum Bias for Positional Play):
Landry momentum on Weekly showing signs of revival with a PBC candle after 3 weeks of downtrend.
No Money to Hard money transition possible.
Net4% Movers:
Last week we had the clear bounce signal. Net 4% had an 8% print.
This bullishness has waned since.
N50:
N50 bounced off the major swing low support area (Gap), below all key MAs.
But has been slapped from the confluence of Avwap (from swing high) and 50-DMA.
As such, 3 possibilities open Up:
A higher low and bounce.
A test of the previous low and bounce (double bottom). or
New lows.
My bias is slightly towards the latter 2.
Anticipation:
Midsmall400 finally bounced but has been slapped by the 50-DMA and by virtue of which we do have a higher low. This slap was also anticipated.
As such, the bias is of a downtrend.
The bounce has turned out to be a counter-trend bounce for now.
Currently squeezed between the 50-DMA from the top and 21-Ema/5-DMA from the bottom.
3 possibilities open up here as well viz. A higher low, An equal low and a lower low.
My bias is slightly towards the latter 2.
(But 45-47.5% probability remains that we can breakout of the 50-DMA.)
How does this translate to your trading?
Be Water. If trading still, flow with the market.
Risk exposure should be attuned to the fluctuations of the market.
As we are still trading below the larger 50-DMA, M is clearly not condusive.
No amount of tighter Risk management will save you from losing money.
Remember the hierarchy to make Money?
Market >> Relative Strength Stocks > Entry Point and then comes Risk Management.
So, save your chips.
Trade less, trade less size.
Positional bias = No Money but can change to hard money
PS: Anticipations are often wrong, and biases should be adjusted after every candle.
If you dont know this already, I update my Market MATH every day on my website under the BREADTH section. Please check in every day post-market.
Group Strength:
Sectoral:
Autos had a peak week and could be starting a new upcycle.
Defence finds a base
Index:
Auto, Consumption dominates
Watchlists:
Follow the Strongest Stocks (the RS 100 and RS 100 Liquid watchlists below):
Find Tightness candidates from Tandem Inside bars and Tandem Low ranges.
https://www.sakatashomma.com/scanners
EP season is done for now. PBCs on good Earnings reactions is going be in focus.
Find my Actionable EP list for this season below.
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